The government on Monday released gross domestic product (GDP) data, pegging India’s economic growth for the first quarter of 2026-27 at a strong 7.8% despite geopolitical tensions, supply chain disruptions, and a tariff war. Opposition parties and some experts have questioned these numbers. Is there any merit in their allegations? Mint explains.

Was the Q1 economic growth surprising?

Yes. The 7.8% growth in the GDP did beat expectations. In the first quarter of FY26, the economy posted a growth of just 6.8%. The Reserve Bank of India (RBI), in its August monetary policy review, estimated June-quarter growth at 7%. In late August, Mint polled 21 economists, who pegged GDP growth at 7.4%. The faster pace of growth has been achieved amid a tariff war and an escalation in geopolitical tensions, including the US-Iran war that shut the Strait of Hormuz and disrupted the flow of oil and other products from West Asia, sending their prices soaring.

What contributed to this growth?

The data suggests an all-round performance. The services sector posted a strong 12.1% growth while manufacturing grew by 9.2%. Gross fixed capital formation, a measure of investment in the economy, increased by 11.9% as against 5.8% in the year-ago period. This suggests a possible revival in private investment. Household consumption grew at 7.1% as against 6.8% in Q1 FY26. Exports grew by 12%. Chief economic advisor V. Anantha Nageswaran attributed this performance to the continued resilience of the Indian economy despite the West Asia war and ground efforts to ensure the availability of inputs.

But not all are happy?

The Congress Party has called these numbers ‘statistical gymnastics’. Its president, Mallikarjun Kharge, said that even as the Centre is celebrating these growth figures, the common man is grappling with unprecedented unemployment, an unbearable rise in prices, and unbridled inequality. Jairam Ramesh questioned the methodology and alleged that it concealed the economy's underlying weakness. Former RBI chief Raghuram Rajan asked why this growth was not generating jobs and triggering investment.

What about Subash Garg’s 2.6% growth?

Former finance secretary Subhash Garg waded into this controversy and announced that the actual GDP growth in current prices was only 2.6% and in real terms 0%. He argued that the government had earlier announced the size of GDP in Q1 FY26 as ₹86 trillion, but has now revised it downward to ₹80 trillion while calculating the Q1 FY27 GDP growth. If the ₹86 trillion size is retained, growth is just 2.6%, as Q1 FY27 GDP is ₹88.27 trillion. He claimed that manufacturing and consumption actually witnessed negative growth.

What is the government’s response?

The government has clarified that the GDP size of ₹86 trillion for Q1 FY26 was earlier arrived at using the old series, which has 2011-12 as the base year, while the revised Q1 FY26 figures of ₹80 trillion and the Q1 FY27 figure of ₹88 trillion were arrived at using the new series that has 2022-23 as the base year. Garg, experts said, was erroneously using figures from two different series to arrive at his growth. The 7.8% growth, the government added, was corroborated by robust goods and services tax (GST) collections, strong bank credit and auto sales.

The government on Monday released gross domestic product (GDP) data, pegging India’s economic growth for the first quarter of 2026-27 at a strong 7.8% despite geopolitical tensions, supply chain disruptions, and a tariff war. Opposition parties and some experts have questioned these numbers. Is there any merit in their allegations? Mint explains.

Was the Q1 economic growth surprising?

Yes. The 7.8% growth in the GDP did beat expectations. In the first quarter of FY26, the economy posted a growth of just 6.8%. The Reserve Bank of India (RBI), in its August monetary policy review, estimated June-quarter growth at 7%. In late August, Mint polled 21 economists, who pegged GDP growth at 7.4%. The faster pace of growth has been achieved amid a tariff war and an escalation in geopolitical tensions, including the US-Iran war that shut the Strait of Hormuz and disrupted the flow of oil and other products from West Asia, sending their prices soaring.

What contributed to this growth?

The data suggests an all-round performance. The services sector posted a strong 12.1% growth while manufacturing grew by 9.2%. Gross fixed capital formation, a measure of investment in the economy, increased by 11.9% as against 5.8% in the year-ago period. This suggests a possible revival in private investment. Household consumption grew at 7.1% as against 6.8% in Q1 FY26. Exports grew by 12%. Chief economic advisor V. Anantha Nageswaran attributed this performance to the continued resilience of the Indian economy despite the West Asia war and ground efforts to ensure the availability of inputs.

But not all are happy?

The Congress Party has called these numbers ‘statistical gymnastics’. Its president, Mallikarjun Kharge, said that even as the Centre is celebrating these growth figures, the common man is grappling with unprecedented unemployment, an unbearable rise in prices, and unbridled inequality. Jairam Ramesh questioned the methodology and alleged that it concealed the economy's underlying weakness. Former RBI chief Raghuram Rajan asked why this growth was not generating jobs and triggering investment.

What about Subash Garg’s 2.6% growth?

Former finance secretary Subhash Garg waded into this controversy and announced that the actual GDP growth in current prices was only 2.6% and in real terms 0%. He argued that the government had earlier announced the size of GDP in Q1 FY26 as ₹86 trillion, but has now revised it downward to ₹80 trillion while calculating the Q1 FY27 GDP growth. If the ₹86 trillion size is retained, growth is just 2.6%, as Q1 FY27 GDP is ₹88.27 trillion. He claimed that manufacturing and consumption actually witnessed negative growth.

What is the government’s response?

The government has clarified that the GDP size of ₹86 trillion for Q1 FY26 was earlier arrived at using the old series, which has 2011-12 as the base year, while the revised Q1 FY26 figures of ₹80 trillion and the Q1 FY27 figure of ₹88 trillion were arrived at using the new series that has 2022-23 as the base year. Garg, experts said, was erroneously using figures from two different series to arrive at his growth. The 7.8% growth, the government added, was corroborated by robust goods and services tax (GST) collections, strong bank credit and auto sales.