India GDP likely grew 7.3% in June quarter despite Iran war

India's economy likely grew at a median 7.3% in the first quarter of FY27, an ET poll of 10 economists showed, with estimates ranging from 6.7% to 8%. The growth was driven by resilient consumption, strong exports, and robust government capital expenditure, which defied supply chain disruptions and inflated commodity prices from the Iran war. The Reserve Bank of India had pegged June quarter growth at 7%, while the National Statistical Office will release official data on August 31.

High-frequency indicators showed industrial production grew by an average of 5.7% in Q1, up from 3.8% in the previous quarter. Passenger vehicle sales rose 25.6%, nearly doubling from a 13.1% rise in Q4FY26. The Centre's capital expenditure rose 18.6% in Q1, compared with 9.1% in the previous quarter. Services activity remained buoyant, with the purchasing managers' index rising to 58.6 from 58, and services exports accelerating to 13.1% from 8.9%.

Economists expect the strength to moderate in the second and third quarters as the fallout of the Iran war feeds through. CareEdge Ratings has revised its FY27 growth forecast to 7% from 6.7%, while DBS Bank sees an upside bias to its estimate. Weather-related and geopolitical uncertainties remain key risks, with economists flagging the spatial distribution of rainfall and continued volatility in global energy prices.