India’s Growth Numbers Look Strong, But What’s Behind the Curtain?

India’s Q1 FY26 GDP numbers are out, and the headline is eye-catching — a growth rate of 7.8%.

On paper, this is great news. The government attributes the surge to strong domestic demand, good agricultural output, a push in construction, and healthy GST collections.

But when we look around, the picture feels more complex.

Several capex-heavy sectors are showing signs of pressure. Profit margins remain tight, and many industries are yet to see a broad-based recovery. So where is this growth coming from?

The Role of Inflation in Real GDP

Here’s the technical piece. Real GDP is calculated as Nominal GDP minus Inflation.

This quarter:

• Nominal GDP grew at just 8.8%

• Inflation used for calculation? Just 1%

That math gives us 7.8% real growth.

But does 1% inflation reflect reality? Most households would disagree.

From rising school fees to higher grocery bills, insurance premiums, and power costs, the cost of living feels anything but flat. If inflation is understated, it naturally makes real GDP look stronger than what people are feeling on the ground.

A Tale of Two Indias

India today stands at a crossroads.

On one side, private refiners are making windfall profits from discounted Russian crude — estimated at over ₹30,000 crore annually. These gains are concentrated within a few corporate houses and haven’t translated to lower fuel prices for the average consumer.

On the other side, textile and apparel exporters are bracing for losses from steep U.S. tariffs, potentially costing $2 billion annually and impacting over 3 lakh jobs.

A Smarter Policy Design

What if we recycled just 25% of the oil windfall (about ₹7,500 crore) into an Export Support Fund?

We could:

• Cushion tariff shocks in labour-heavy sectors

• Retain competitiveness in global markets

• Support inclusive, job-led growth

This isn’t about penalizing profits. It’s about redistributing gains strategically to support resilience.

Growth Isn’t Just Top Line

Over the years, I’ve seen how smart tax planning and disciplined financial management can create growth without new revenue.

By unlocking cash from tax credits, managing working capital better, and reinvesting operational savings, businesses can grow sustainably even in uncertain markets.

Because real growth isn’t just about what we earn — it’s about what we keep, and how we use it.