Endurance test: On the Indian economy’s resilience

India’s economic growth during the first quarter of this financial year has surprised most people. Against a perception among economists that growth would slow to about 6%-7% on account of the impact of the West Asia crisis, real growth in the April-June 2026 quarter came in at a robust 7.8% . This was not a statistical anomaly, either, as growth was underpinned by strong performances in both manufacturing and services. In fact, the manufacturing sector grew at a three-quarter-high of 9.2%. The sector has likely benefited from the Goods and Services Tax rate cut implemented last September, and further from the Reserve Bank of India’s (RBI) 125-basis point cumulative interest rate cuts through 2025. A part of it is also that companies likely front-loaded their output in the expectation of further uncertainty on inflation, potential future rate hikes, and other possible headwinds.