New Delhi, Sep 16 (IANS) The robust GDP growth in the first quarter (Q1 FY26), at 7.8 per cent which was well above the estimate of 6.6 per cent, was led by a sharp growth in the manufacturing sector and strong momentum in the services sector, a report said on Tuesday.

“All three heads within the services – Trade, Hotels, Transport, and Commerce and Broadcasting Services (8.6 per cent as compared to the estimated 6 per cent), Financial, Real Estate, and Professional Services (9.5 per cent in Q1FY26 as compared to 7.8 per cent in Q4FY25), and Public Administration and Defence (9.8 per cent as compared to 8.7 per cent) performed well,” CareEdge Ratings said in its report.

While the healthy momentum in the services sector was somewhat reflected by high-frequency indicators like strong growth in central revenue expenditure, healthy services exports, growth in e-way bill collection and cargo traffic, the overall growth for this sector turned out higher than expected.

Within the industry, the manufacturing sector posted higher growth (7.7 per cent as compared to 4.8 per cent), likely supported by improving domestic consumption and the frontloading of imports by developed economies ahead of higher tariff implementation.

This sharp rise in manufacturing is a positive development.

However, the gains in manufacturing were partly offset by a sharp contraction in mining (-3.1 per cent compared to 2.5 per cent) and a moderation in utilities (0.5 per cent as compared to 5.4 per cent), which capped the overall industrial growth. The early onset of the monsoon weighed on mining activity, the report stated.

Contrary to expectations, agricultural growth moderated in Q1 FY26 (3.7 per cent as compared to 5.4 per cent). However, a good monsoon along with robust Kharif sowing should support agricultural growth going forward.

Overall Gross Value Added (GVA) growth stood at 7.6 per cent for Q1 FY26.

The positive gap between GDP and GVA was in line with expectations, as growth in indirect taxes outpaced the growth in subsidies, the report noted.

–IANS

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