India Q1 GDP Grows 7.8% Amid Tariff Concerns
India Q1 GDP Grows 7.8% Amid Tariff Concerns

India Q1 GDP Grows 7.8% Amid Tariff Concerns

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India's economy grew 7.8% year-on-year in the April to June quarter of fiscal year 2026, surpassing expectations due to strong government spending, manufacturing growth, and consumer sentiment. Despite this robust performance, economists warn that the impact of steep US tariffs—imposed by President Donald Trump as a response to India's purchases of Russian oil—has yet to fully affect exports, with a potential decline projected in upcoming quarters. Exports increased by 6.3% but were offset by a 10.9% rise in imports, limiting net export contributions to GDP growth. Domestic factors such as consumption, capital formation, and financial services showed strong momentum, while agriculture grew modestly at 3.7%. Analysts caution that global trade uncertainties and tariff-related challenges could dampen growth ahead, suggesting ongoing need for supportive fiscal and monetary policies. The Reserve Bank of India is not expected to ease rates soon, while government fiscal measures like GST rationalization aim to bolster domestic demand.

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