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Key Takeaways
India’s economy saw a robust growth of 7.8% in Q4 FY26 and recorded a 7.7% growth for FY26, as per the report published by MoSPI on June 5, 2026. The Q4 GDP figure reflects a month of activity after the US-Israel and Iran conflicts, and the shutdown of the Hormuz Strait on February 28, 2026.
This one-month period is critical, as the Hormuz Strait accounts for most of India’s imports of crude oil, gas, and liquid petroleum gas (LPG). The full impact of the shock will emerge in Q1 of FY27, which ends with June 2026.
The 7.8% growth sounds impressive on its face. However, households all across India have started experiencing rising prices of fuels and other necessities. On the very day GDP figures were announced, the RBI revised its FY27 GDP growth forecasts downwards to 6.6% from 6.9% and increased its inflation projections to 5.1% from 4.6%.
Here is how GDP grew in FY26:
The fastest growth in GDP occurred at 8.2% in Q2. Since that time, growth has declined.
V Anantha Nageswara Rao, Chief Economic Advisor, said that the GDP figures were a balanced view of the various economic sectors. Not sounding alarmed about the situation. However, two consecutive rate revisions by the central bank on the very same day clearly indicate that there are apprehensions regarding the coming Q1 FY27 GDP figures.
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The GDP figure for FY26 was 7.7%, while the GDP at market price was 7.8%. The GDP at market price includes indirect taxes and subsidies, but it provides a better indicator of economic performance, which is measured by GDP at Value Added.
The GDP at value added (GVA) registered a 7.9% growth, and the figure stood at 294.91 trillion rupees in FY26 against 273.36 trillion rupees in FY25. This was the last GDP print before the Hormuz Strait crisis affected the economic performance of the nation.
The RBI has slashed the repo rate by 50 basis points in June 2026 to 5.25%. The future action regarding further cuts may be contingent upon the inflation figures for the months of June and July 2026.
The GDP numbers for FY26 seem promising, as the 7.7% GDP growth rate is higher than what was estimated by the government in February 2026 at 7.6%. The coming set of GDP numbers would most probably be published at the end of August 2026 and would reflect economic performance for Q1 of FY27. This would be the last GDP figure before India faces the consequences of the Hormuz Strait Closure.
1. What is the rate of growth of India’s GDP in Q4 of FY26, and is it a good growth rate?
Yes. The rate of 7.8% proves that India’s economic growth is substantial when compared to some major other economies, and added up to an economic growth rate of 7.7% in FY26. This figure has exceeded government estimates. However, the effects of increased oil prices and the disturbance at the Hormuz Strait may be felt in the following quarter.
2. Why don’t people feel the pinch even as GDP continues to rise?
The gross domestic product measures the performance of the national economy rather than personal finances. An economy may grow despite the fact that families continue to experience increased expenses such as fuel and food costs.
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