Reaping benefits of reforms in very uncertain global environment: CEA | Economy & Policy News

India’s economy has ridden out a quarter clouded by conflict in West Asia and volatile energy prices, Chief Economic Adviser V Anantha Nageswaran said on Monday, arguing that the strong showing demonstrated the economy’s “continued resilience” and the payoff from years of structural reforms. The quarter, he said, showed India “reaping the benefits of those structural reforms in a very uncertain global environment.”

 

Speaking at a press conference following the release of India’s quarterly gross domestic product (GDP) estimates for the first quarter of 2026-27 (FY27), Nageswaran said growth had stayed strong despite West Asia-related uncertainty, with manufacturing and services “doing quite well” even as agriculture contributed slightly less.

  

“What we are witnessing is continued resilience in the Indian growth performance. I think that is the key message here. And this resilience in the quarterly data is well backed by high frequency indicators. The quarterly real GDP numbers in general after a slight lull towards the latter part of 2024-25 has picked up quite well and has weathered global uncertainties worldwide,” Nageswaran said.

 

“The near-term domestic economic momentum is very strong, but globally we are continuing to see uncertainties,” the CEA reckoned, citing interest rates, energy commodity supplies and food prices as issues “still in the air.”

 

According to the figures released by the Ministry of Statistics and Programme Implementation (MoSPI) on Monday, real GDP grew 7.8 per cent in the April-June quarter, down from 8.6 per cent in the last quarter of FY26 (January-March).

 

The CEA noted that merchandise exports other than oil, gold, gems and jewellery had “grown very briskly,” and argued that the strength of manufacturing exports not driven by oil, gems and jewellery was itself evidence of policy gains.

 

That resilience in a globally uncertain environment, he said, indicated “the beneficial effects of the free trade agreements, export diversification efforts by the government, and also possibly the rising competitiveness, innovation, and productivity of the Indian manufacturing sector.”

 

Demand conditions, too, remained strong. Nageswaran pointed to good growth in rural and urban auto sales across two-, three- and four-wheelers as very good news as far as the underlying sources of demand in the economy are concerned, calling it another indication of the “buoyancy of economic activity.”

 

On oil, the CEA struck a more watchful note. “The oil price impact of the conflict has remained muted than what one would have expected, and thankfully so from the Indian perspective,” he said, crediting lower Chinese demand and strategic petroleum reserve releases.

 

He, however, warned that the disruptions were expected to last longer than anticipated, leaving “a lurking risk of crude oil supply disruption” that would probably keep prices from “coming down materially and sustainably.”

 

Nageswaran added that petroleum product prices, such as diesel and natural gas, could pose a risk to global demand and to growth prospects in the coming year — which, he said, made it necessary to “keep our diversification efforts going” and ensure cost competitiveness.

 

The GDP data incorporated some newly introduced indicators — a new Producer Price Index (PPI) replacing the old Wholesale Price Index (WPI), an updated Index of Industrial Production (IIP), and a Banking Services Price Index — all aligned more closely with global standards.

 

MoSPI Secretary Saurabh Garg, also speaking at the conference, flagged the first-time use of double deflation, the international best-practice method of deflating inputs and outputs with separate price indices, saying it had produced only “marginal revisions” in the estimates. He noted the technique can occasionally pull nominal growth below real growth when input and output prices diverge but said the numbers remained “as strong as ever.”

 

Additionally, on inflation, Nageswaran said prices were “reasonably well-behaved” and well within the target range of the central bank as far as CPI is concerned. Agriculture, too, was faring far better than what was feared on account of the monsoon volatility.