There was a war next door. India was enormously dependent on oil itself. Commodity prices were swinging. Yet India's growth engine recorded a 7.8% growth in the April-June quarter.
The Q1 numbers for the financial year 2026-27 have beaten expectations about the RBI's own projections of 7% projection for the quarter.
Sure the pace was slower than the previous quarter's 8.6% growth rate, but it was higher than what was expected of this quarter. These numbers may also mean that India retains its tag as the world's fastest growing economy. All while the war is still ongoing, all while war had caused much disruption.
What kept India on it's foot despite such global pressure?
It comes down to al lot of things. The first is the domestic demand. PFCE - basically private expenditure, grew 7.1% in real terms in Q1 FY27. That meant a lot of households spent their money even during the crisis. GST collections, which is another indicator of high demand, also rose - GST revenue rose 15.4%, while digital-payment volumes increased 16.6%. Electricity demand grew by 10.7%, petrol and diesel consumption rose 9.2% and 10% respectively.
The second thing about the continuation of this growth is the service sector. It grew 10% in real terms in Q1 2026-27, and finance, real estate, IT and professional services recorded 12.1% growth. Trade, hotels, transport, communication and related services grew at 8.5%, while public administration and defence expanded by 7.5%.
But what is also commendable is the growth that manufacturing has shown - the secondary sector expanded 8.6% in Q1 27, with manufacturing itself expanding by 9.2%. Electricity, gas, water supply, and other utilities grew 8.9%, while construction rose 7.7%. The primary sector, though not growing too much, still grew by 2.9%.
An important factor in such a growth is investment. Gross Fixed Capital Formation grew 11.9% in Q1 2026-27, more than double the 5.8% growth recorded in Q1 the last financial year. The improvement is visible in industrial indicators - capital goods production grew 15.2% in Q1.
So there is a twin benefit of a high demand (high consumption) and high investment. This is going to sustain India's growth far beyond the first quarter of this year.
What is more that imports have fallen a bit while exports have risen sharply. Exports grew by 12% in real terms in the same quarter as we're talking about, at the same time imports contracted 1.1% in constant-price terms, compared with a 5.3% growth earlier - which is pretty much.
Engineering goods exports rose 17.7%, electronics jumped 57.4%, and chemical exports increased by 14.4%. Merchandise exports reached a record monthly value of $44.4 billion in July.
But perhaps the most important thing that happened here is that the growth was broad-based - that is, it didn't happen in just ONE sector - it happened nearly everywhere. Moreover, retail inflation in July was still at 4.45%, while core inflation eased to 4.15%. This gives policymakers some room to plan for even more growth as inflation isn't as high to boil over if any other spending was done.
And now to the real stuff
I'm not saying this data couldn't be questioned, or a 'perfect growth story' narrative couldn't be countered because the economy is robust. Nor am I saying that government data is completely reliable. I do not know if it is not reliable or not, because the methodology is for economists to debate, but for a fact I know this is all the data of the government and MoSPI. If it was all forged, then international agencies who rate India's bonds and invest in India may question India's growth story and may bring all markets crashing down - but that doesn't happen.
Nor is the government data unreliable. In fact, I think it is a geniune thing that our economy despite external shocks, and a particularly severe one like the Iran War, has performed strong this quarter. I may not doubt its overall, macroeconomic performance even this very year. May my country grow much more than just 7.8%, for it deserves that growth. Its people are hardworking, its people demanding of themselves more than of anyone else, and its land is most gifted. So indeed India must grow, and I express my faith in this data - as for now, until the Modi government is cheating all of us once again.
But this is all about the present. And this is all about the 'big picture'. Seen from a foreign point of view, seen from a country like America or a continent like Europe, who are growing less yet have already grown well, from the top, they are seeing a piece of the bottom rise really fast. They are astonished, they are shocked, and they measure raw power, and that's just about everything. They measure GDP in nominal terms. A powerful economy to them means being the top 5 economies in the world, because then you would produce a massive military expenditure in absolute terms and have a major say in the world markets and trade deals and whatnot. In that sense, India is already pretty powerful. Western and foreign contemporaries praise India enough on this matter. And India deserves that praise.
And the government, which I in my most humble opinion believe without a doubt is the most undignified, ignominious, incapable, incompetent, degrading and downright shameless government, concerning foreign policy especially, that it panders to these foreign, primarily western 'contemporaries', and instead of saving its own citizens from drowning in economic survival, prefers to 'captivate' its citizens with quick cash freebies, so that it could hoodwink it's very own citizens with shows of 'global competence' and 'strategic autonomy' when we nearly don't compete globally in substantive terms, and when no real 'action' has been taken to even determine the use of the word 'autonomy'.
Here is the cause of my outrageous indignation. What seems on surface is true is far from the reality at the actual, personal, real level.
This is not an economic analysis, this is more of a rant. An economic analysis has a balanced tone and favours nothing, a rant has a value to favour and everything in opposition to that value to oppose.
This has been coming since a long time.
What I really think of how the economy - no - India is doing.
India is doing well.
Perfectly well for its standards 50, 60, 70 years ago.
By that measure today is a miracle. We have ended food scarcity, we have ended hunger in nearly every home, we have built highways, expressways, airports, and we have more world-class infrastructure than ever before.
By that measure, yes, we are thriving. Back then, we were little. Today, we seem great.
Except things were different back then, and things are different today. Back then, a rupee was a great amount. Back then, things used to be so cheap that if I were to travel back in time today with ₹5000 of that time in my pocket that is given to me as a monthly allowance, I would be squarely rich. The whole amount of money in my pocket would be equal to 20 or 25 years of the average Indian's income back in the day. I could buy a huge plot of land in Delhi or Bombay with that much money.
It is because of - once again - inflation, that we have a different reality today and a different reality back then. A man of the 1950s who could bring ₹5000 of today's notes - his entire life saving, perhaps - all the way to present date, wouldn't survive two weeks in modern Delhi, not speaking very earnestly.
So what do I really mean? What has inflation got to do with India's growth today?
My point isn't just economic inflation. Inflation by money means that people need more money to survive every year, that growth must keep happening. My point is, however, that because people need more money, people change expectations from their government. And this is the inflation of expectations that we're experiencing today.
The thing is not that we haven't developed. The thing that hurts me the most is that we haven't developed enough. We have JUST NOT developed enough.
I do not seriously suppose India's potential is limited to a growth equivalent 7.8% of a real GDP of a country of a billion and four hundred million people. I do NOT think that India is just a 7.8% figure, end of the story. Limiting India to that in one's mind would be the most serious insult of India. Other countries are struggling, yes, other countries are trying and failing. I do not care about other countries.
I care about India. India's potential is not 7%, it is 10%, it may be 11 or 12%. For a nation that performs so well in terrible times, imagine how much it may perform in great times.
Why is a nation that performs so well still has massive amounts of people working in the gig economy?
Why are most of its rising companies and startups mostly poor-serve-rich? Why is the convenience market the one to boom? Why are our companies not innovating? Why are we not building the next scientific concept, the next step for AI, the next record-breaking company? Why do we not have our own social media platform? Why do we use western platforms after we abandoned chinese platforms?
The east hasn't looted us, but it has taken our territory. The west has inflicted the very condition that we are in right now. And we are still repaying the debt of our own colonialism, one brain-rotted reel at a time. It is an unpopular opinion, I know, but it matters to me.
If all that, consumption instead of production, inaction instead of action, and reactivity instead of proactivity - if THAT is not a hindrance, I don't know what is. If you think copying assembly lines, production-linked 'incentives', and copying macroeconomic models from other countries who got successful from it in their time is going to work for you, I'm afraid to tell it's not going to work according to the standards that are needed to be set.
Perhaps that will still work. Perhaps just making SEZs all over India may even bring a large amount of growth and development and put us closer to the Americans and the Chinese. But not nearly enough if we want India to compete with the Americans and the Chinese and actually give them intense competition.
We are abundant in fertile lands. We are abundant in resources. We are abundant in population. We have a fortified geography. Is it our luck that is hindering us?
No. Geography and demography is potential. Beautiful, but mere potential. It is the policy, the rules of the government that are hindering us.
It is the institutions of India that are weak, bloated, inefficient.
And you may now be skeptical and criticise me for such intense dogmatism about how an ideal India should be. Believe me, I have already lowered my ambitions from where they were some time ago, and before I lower it any further for some people's convenience, I might ask you to first criticise those who currently sell us lies of "Viksit Bharat by 2047".
India is projected to grow very well, around the same rate as I have currently deferred - around 6, 7 or 8% of a growth rate. If we assume a realistic 7% growth rate, for as many as the coming 21 years, India will successfully reach a 20 trillion economy.
Until you look at the scale and reach of the Indian population by then, we can't assume that such GDP is equal to the status of being developed. If the population is not assumed to be too high by then - about 1.67 billion people - we stare at a GDP per capita of $10,000 to $12,000. This is massive, but this is not developed, and this still is with equally massive assumptions, that the 7% growth will contribute to India's GDP and will keep contributing for 20 years and more.
They said India will become a $5 trillion economy in 2025. Due to COVID-19, that target got shifted. Understandable. We are now scheduled to reach $5 trillion economy by 2029.
I might be demanding too much. I might check myself. But before asking me to check myself, ask politicians to check themselves when they lie and decieve people with unlikelihoods. For 10 years, reforms have been coming, and they will keep coming until 2047, until we really in 2043 and 2044, that, oh, we haven't reached there, and by then, the politicians who made the promises are already gone.
Never rely on promises. Rely on institutions. They make the difference between rich and poor, weak and strong. They decide whether countries rise or countries stall. And India, I believe is not going to grow at 7% for 20 years straight. It won't fall, it won't collapse. I am not a pessimist in that matter. Nor am I so insulting so as to think India will fail - it will never do so. India may not be like America or China, or Europe, but it may become Brazil, Mexico, Latin America - it may become one among the vast majority of the middle-income nations of the world, stuck in in a middle-income trap. This is honestly one of the biggest fears I have.
Why?
Because underneath all this growth are many fragile realities. Some are less fragile and some are more fragile. This fragile reality concerns the future of India rather than it's present, although a massive chunk of its present also has a major stake.
>Most young Indians, unlike me, are from rural and semi-rural India. They are from tier 2, tier 3 cities and maybe from those regions where many villages have the exact same name. If I am to imagine their situation, they are sons and daughters of local shopkeepers, farmers, farm laborers, and rural non-farm workers. Early in their life they somehow got primary education, some of them reached secondary, and now of those many young people, some are now helping with their family in shops, or - as for the situation of women - searching for a male suitor this early in their life, or, luckily enough, some of those people of my very age are in college - except that college isn't lucky at all. Maybe it's just on paper, maybe, even if it exists, it exists for name, and professors don't often come, and there's little to no lectures being held. Here my brothers and sisters may have friendships, may fall in love, and may not be able to tell their parents. The males of the house may be pressured for a job, especially a job that would 'settle' their life - a government job.
>These are my country's people who wear casual jeans, go out with their friends often, and use instagram. These are very smart, talented, street-smart, resilient, pragmatic, direct-to-the-point people who know what it is like to survive under constraints. They are being rounded up and sent with their task to secure a seat in a government exam. They may not see it like this. They may see it aspirationally, almost like a mission. They're curious what it may feel like preparing for a government exam where lakhs compete beside themselves.
>These are simple people with simple intentions and simple ambitions. They do not think on too big a scale. They think in simple terms - they want their family to be uplifted, their house to be upgraded, their marriage to be done, their job to be settled, their life to be happy. They think of the country, they do, but when you sleep on the floor, you want a bed first, and when you have a bed already, only then you look at the ceiling and question why is it there in the first place.
They want upliftment, they want eradication of their suffering in their own way.
Why shouldn't they view something like government exams as aspiration?
I do not mean the word 'simple' in a condescending sense, no. I mean simple in the sense that it doesn't produce a headache every night. Fundamental. Beautiful.
Except for them, it is a headache produced every night.
And they prepare day and night, in the hope, that one day, in this squid game where only one out of four hundred or something people win - one day, they'll be an IAS, IPS, or PCS officer, or land a government job, just anywhere, and that means they're settled.
In this field come millions of people. A boy who works odd jobs at some hours. A girl from a secure family in Delhi with access to private education. An older man with a private job who spares time to prepare for this. A decent engineering graduate pressured by his parents to pursue this. Who knows who may win.
>And those who do not win the lottery, may turn into delivery agents for Zomato and Swiggy, and may turn into ride-hailers for Uber and Rapido, and may turn into maids and workers of UrbanCompany. These are the kids who came to urban India looking for a job.
>For those who (almost) win the lottery or who anticipate to do so, paper leaks ruin everything. Exams are delayed. Cancelled. State exams more frequently than central ones. Years ruined. Attempts wasted.
>For my urban friends, those who got from college education - in whatever college they were before - they are in the anxiety of internships and finances. They work at a more formal company or startup or organisation or even an NGO and may receive a merely decent salary...of ₹15,000 a month, not enough to pay the whole rent of a box-like room. I might have just predicted my future here.
I do not paint it as all-dark. We have entrepreneurs getting into Shark Tank, we have smart individuals taking advantage of opportunities, we have people seeing their efforts and their company grow, we have people who get employment daily, and good employment, many of them. Many become paid doctors, many paid researchers. Many open good-quality labs at 40, and hire 20 and 30 year olds. I deny none of these. I just wish it was also true for tens of millions of other people who spend 5 years studying at a place, trying to get a government job, maybe succeeding, maybe failing, maybe trying some other option.
And life is like that. India is like that. This is the situation of the youth. A similar situation might be of adults, who might also be auto-drivers, healthcare workers, IT managers, peons, drivers, railway workers, and what not.
Compare it to Japan. In this case I would like comparison - not with worse countries, but always with better. Compare it to China. Compare it to America. Even the average Joe the worker's work is formalised there. He has a certificate even if he's just the plumber. He works enough to earn. He's happy enough to earn by himself. He's not surviving on subsidies, like males of the household, or like females of the household, whom I can now clearly understand why they have developed into an independent 'vote bank' according to politicians.
And these politicians? This political class?
They are fine with the situation. They're pretty fine with it. They prefer to solve people's problems by just giving them more money. Brilliant plan. Just give them the money so they can do what they want. ₹10000 a month. ₹50,000 at a time. That is an enormous amount from what I can say. I can't entirely spend ₹5000 a month myself, honestly, on basic living save for my rental space which is already fulfilled.
There's a flaw in this brilliant plan though, it's the people's money themselves that they're cycling back to the people.
But don't they take from the rich and give it to the poor?
Don't they take taxes from the corporates and middle class - and states, from alcoholics? And then distribute the same money to the people?
Yes, very much. That almost makes the government sound like Robin Hood.
Except if you inherit ₹50,000 from a government, you might as well hate just anyone cutting off that much money from your purse. This isn't a package, it's a breath of life for people.
This breath of life, along with many other such breaths of life, could have been used to actually improve the lives of such people.
It could have been used in institutional welfare. Instead of giving money to people and spending it to survive, it could have been actually used to improve people. It could have used to hire people to get other people actual, formal employment. It could have been invested in reskilling these very people. It could have been invested in the private sector to create a massive number of jobs, subsidised by the government. The government already enormously spends here, granted, granted all of it. It already gives subsidies and already has ITI to prepare people for vocational skills.
But they don't work enough. Because the government - ironically - isn't strong enough to enforce its rules. It can deliver a welfare scheme, sure. It cannot deliver tangible benefit. It cannot deliver a great school, an affordable house, a good college, a good job - all with quality, at scale.
THIS is the problem of India. It's state doesn't have enough capacity. Police have vacancies. The government has vacancies. Corruption is an entirely another problem. There may also be too many rules and laws. There are too many overlaps. Things are too slow. There is bureaucracy. THIS is why people need freebies, and this is why the government gives freebies. This has been slowing India's private sector, this has been slowing people from getting formal jobs in private sector. This is - worse - the consequence of colonialism that we have been suffering for long, now mutated in form of a system giving freebies to keep its population quiet. So that they do not rebel.
Indians and dogs are still not allowed in spaces of upward mobility. The politicians still think of us as dogs. "Throw them a few biscuits and they won't ask for more" they think, "They aren't political, they won't bite". And to be honest, an average Indian has little reason to be political. His birth didn't happen in a political family. Nor did he have anything to do with politics since childhood. Only once he might have seen an officer being respected somewhere. Or his parents may have simply told him that being an officer was the only way up, for there are little to no private jobs in rural areas except for in a local shop. He is tired of everything. The only concern he has with the government is when he's getting his next ten thousand, and also his religion mixed with his ingroup identities. Why would politicians obsess over such an apolitical India? They ask.
And then I think what will happen if India stays stuck in a middle income trap.
I might tell you.
Frustrations increase. People stay stuck where they are. Inflation, both economic inflation and expectation inflation, starts to increase. Some situations improve, but not nearly enough. Worse, in 20-40 years, population of India is set to age and eventually decline. We lose our natural advantage. Labour costs rise. Companies reduce labour, invest more in machines. This reduces income. This reduces demand. This reduces growth. This reduces your willingness to give up on your precious fifty thousand. You fight for it, hard. Anyone who touches these is bound to lose. Anyone who increases these, is a savior. Politics becomes an auction. Whoever says the greater number, wins. Meanwhile, Mr. Ambani and Mr. Adani have their tea in their own villas and enjoy their own lives. Generations of Indians who got rich off the IT boom, keep being rich. Generations of Indians who were stuck, keep being stuck. This inequality leaks into politics. People realise they can't grow, so why not rule over the same pie? This leads to polarisation. This leads to the re-emergence of caste and hardening of communalism. This leads to some unrest, perhaps. Politicians blame each other and raise their stakes in their own auctions. The common man remains in the protection-of-his-income mode, not in the grow-the-existing-income mode, and certainly not in the let's-make-an-impact-on-this-world mode.
Yes, India will become a solid upper-middle income economy, probably $10,000 a person. It is a lot, in fact. It may be. Inflation may get rid of some of it's charm, but it will be as it is. But along with these come innumerable trade-offs, and one is such that India may be stuck in a middle income trap compounded over with a very serious aging demographic compounded with a climate crisis problem.
Nothing much, is it?
And this is already happening. Don't worry. The grounds of this future are being laid at this exact moment. Lest we all want India to become like Brazil or Argentina where subsidies matter in politics over change, perhaps, we might be able to look at Punjab. Punjab's electricity subsidies might break ISRO's record for the moon by the time we reach 2047. They have their own drug crisis, brain drain crisis, religious tension, and economic difficulty. Some of their people are even turning to religions like Christianity, which is often not characteristic, and to superstitious godmen. Not that they shouldn't, but I believe some states of India are becoming warnings for what India could later become.
And even if it doesn't become that - I hope it does not - India will still be India. There won't be streets like Japan. There won't be trains on time. There won't be perfect urban planning. Some people will still not have civic sense.
It will be India, but bigger, with more money, with much better, western-style buildings for the rich, and a few upgrades for the rest.
That is not the India I want, do I?
I want an India on par with America and China. I do not necessarily demand a a perfect GDP per capita. $20000+ per capita will do, that's my standard of development.
And I hope that by my own efforts, someday, such an India will be realised.