Conditions ‘steady’ for growth in Q1FY26, backed by economic momentum, says CEA Nageswaran

Chief Economic Advisor (CEA) Anantha Nageswaran.

The economy has entered the fiscal on a strong footing, with steady conditions in place for growth during the April–June quarter, after the GDP saw a robust expansion in the final quarter of FY25, Chief Economic Adviser V Anantha Nageswaran said on May 30 during a briefing after annual and quarterly growth numbers.

The economy grew by 7.4 percent in the January-March quarter, lifting the full-year growth to 6.5 percent, data released by the Ministry of Statistics and Programme Implementation (MoSPI) showed. Read More

“Momentum in economic activity that picked up in Q4 continues in Q1. Conditions are steady for growth in April–June,” said Nageswaran, after the GDP data release.

The CEA pointed at several stabilising factors in the macroeconomic environment. “Food inflation has eased. India Meteorological Department (IMD) has predicted a well-spaced out monsoon. Conditions in place for fiscal stability,” he said, adding that these factors would support continued growth in the current quarter.

“The external sector is supported by resilient merchandise exports and services exports,” the CEA said. Gross foreign direct investment (FDI) remains steady, even though foreign portfolio investment (FPI) showed signs of volatility. “The external environment does not pose any risk to FDI inflows,” Nageswaran said.

However, Nageswaran flagged limited visibility in private investment proposals. “MoSPI survey shows reluctance to share private capital formation plans,” he said.

Amid persistent geopolitical tensions and weakening global growth prospects, India’s economic resilience continues to hold steady. “Amid global uncertainty, global growth for 2026 is likely to slow. Amid geopolitical uncertainties, India’s growth is very good,” Nageswaran said.

Manufacturing

Nageswaran acknowledged that manufacturing continues to face global challenges but pointed to policy support to revive the output. “Manufacturing systemic reforms will show results over time. Manufacturing is a struggle globally in face of aggressive external competition. Time taken by various policy initiatives may take longer,” he said. “Every country is trying to find its way to grow its manufacturing and that is something that India has been doing with the tax incentives for new manufacturing enterprises.”

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Private Consumption Strengthens

“Private consumption is holding on very well,” Nageswaran said, adding that its share has climbed to the highest level since FY04.

The CEA emphasised that India’s economic performance continues to stand out on a global level. “At a real GDP growth at 6.5 percent for FY25, India outshines in view of other economies still recovering from COVID,” he said.

Among the key sectors, agriculture grew by 4.6 percent in FY25, up from the pre-COVID seven-year average of 3.6 percent. Industry grew at 5.9 percent, while services rose 7.2 percent, marginally lower than the pre-COVID average of 8 percent.