Daijiworld Media Network - New Delhi
New Delhi, Aug 31: Pinning hopes on the resilience of the Indian economy, Chief Economic Adviser (CEA) V Anantha Nageswaran on Saturday expressed confidence that the strong growth momentum recorded in the first quarter of the fiscal will extend into the second quarter, though with some drag from steep US tariffs.
India’s GDP expanded by 7.8 per cent in April–June, the fastest pace in five quarters, outstripping expectations. “The first quarter numbers were definitely better than expected. Even though the GDP deflator was weaker compared to last year, it was already factored in by economists. The growth attests to the underlying resilience of the economy and the lagged effects of government reforms since 2014, especially the last two Budgets,” Nageswaran said in an interview.
The CEA, however, noted that the US trade measures are weighing on growth. The Trump administration recently imposed a steep 50 per cent tariff on Indian goods, including a 25 per cent penalty linked to crude oil imports from Russia. The first round of tariffs came into effect on August 7, followed by a second tranche on August 27.
“These tariff measures will impact the second quarter and possibly spill into the early third quarter. But I expect them to be short-lived as talks are underway between India and the US, and I am optimistic about a resolution soon,” he said.
Nageswaran also expressed confidence that the tariff shock will be cushioned by GST relief measures, a robust monsoon, and improved agricultural output. The agriculture sector grew by 3.7 per cent in April–June, a sharp rise from 1.5 per cent in the same period last year, according to the National Statistics Office (NSO).
The Economic Survey had earlier projected real GDP growth in the range of 6.3 to 6.8 per cent for FY26. The 7.8 per cent expansion in Q1 was primarily driven by strong farm output and services such as trade, hotels, finance, and real estate.
India continues to retain the tag of the world’s fastest-growing major economy, with China’s GDP growth at 5.2 per cent in April–June.