India’s Q2 GDP at 7.8% Beats Forecasts, BofA Warns on External Risks

India’s economy grew at a faster clip than expected in the April–June quarter of FY26, but Bank of America (BofA) Securities has cautioned against reading the numbers as a sign of unchecked momentum.

In its latest review, BofA reported that gross domestic product (GDP) rose 7.8% year-on-year in the June quarter, ahead of its own projection of 6.8% and market consensus of 6.7%. Gross value added (GVA) expanded 7.6%, underscoring broad-based strength.

Growth outside agriculture and government activity stood at 8.2%. Manufacturing posted its best showing in five quarters at 7.7%, while financial services surged 9.5% — a two-year high. Agriculture GVA was up 3.7%, aided by a good monsoon, healthy reservoir levels, and comfortable foodgrain stocks, which analysts say could help support rural demand.

On the demand side, consumption rose 7.0% and public spending also picked up as timely government disbursements buoyed investment activity. External trade added little to growth, with exports rising 6.3% but imports climbing 10.9%.

Despite the stronger-than-anticipated print, BofA has left its full-year GDP growth forecast unchanged at 6.5%. The brokerage flagged headwinds from global trade uncertainty and sentiment-driven volatility, which may require support from both monetary and fiscal policy.

Also Read: “India Retains Fastest-Growing Major Economy Crown”: Ajay Bagga On Higher Than Expected 7.8% Q1 GDP Growth | Republic World

BofA does not expect the Reserve Bank of India (RBI) to ease rates in the near term. It noted that low inflation and recent GST rate cuts highlight the government’s active fiscal stance but said future policy moves will depend on incoming data and global conditions.

India’s Q1 FY26 numbers, released by the National Statistical Office (NSO), highlight the country’s strong economic momentum. With real GDP rising 7.8% and nominal GDP up 8.8% in April–June, India has not only outpaced its own past performance but also reinforced its standing as the world’s fastest-growing large economy. Agriculture and Allied Sectors saw a positive turnaround, with real Gross Value Added (GVA) growth jumping to 3.7%, a notable improvement from the 1.5% growth in Q1 of the last fiscal year.