Indian Economy Grows 7.8 Percent in First Quarter

The Reserve Bank of India reported that the Indian economy grew by 7.8 percent in the first quarter of 2026-27. According to the central bank's September Bulletin, this growth persisted despite global turbulence and re-escalating geopolitical tensions in West Asia, which have increased crude oil prices and threatened global supply chains.

High-frequency indicators through August show sustained demand across the services and industry sectors. The external sector remained strong, with foreign exchange reserves reaching an all-time high and the merchandise trade deficit narrowing due to robust export growth. The bank noted that system liquidity surplus surged following FCNR (B) deposit flows, while strong FDI flows and a moderate current account deficit further supported the sector.

However, headline inflation rose to 4.8 percent in August, driven by the food and beverages group, fuel, and core components. The central bank warned that weather-related uncertainties and ongoing geopolitical tensions continue to pose downside risks to the economy.