Going ahead, the economy faces headwinds. Policy support is needed

📌 Summary:

• India's GDP grew 7.8% in Q4 (Jan-Mar) of 2025-26, lifting full-year growth to 7.7% — the highest in three years — despite the West Asia conflict disrupting global energy markets and trade late in the quarter
• However, nominal growth was just 8.9% — the lowest — and well below the 10.1% assumed in the Union Budget
• Sectoral picture: services grew almost 10% (both trade/hotels/transport/communication and financial/real-estate/IT/professional services); agriculture held up; manufacturing slowed; private consumption and investment stayed steady
• Support drivers: GST rate rationalisation and low interest rates cushioned activity amid the uncertainty from Donald Trump's tariff policies
• Outlook 2026-27 is less buoyant: in its June MPC meeting the RBI cut its growth projection to 6.6% (from 6.9%) — about 1.1 percentage points below last year, with some estimates more pessimistic
• Causal chain of the slowdown: higher energy and commodity prices + continued supply-chain disruptions + a possible weak monsoon → momentum hit especially in H1, growth slowing while inflation edges upward
• Added stress: pressure on the balance of payments and the rupee
• Solutions/steps taken: last week measures were announced to attract foreign capital and ease pressure on the rupee; the editorial argues that, given the severity, more steps may still be needed

🎯 UPSC Relevance: GS3 — growth, fiscal and monetary policy, and external-sector stress; the interplay of geopolitics, inflation and the rupee.

📝 Prelims Facts:

• Q4 2025-26 GDP growth 7.8%; full-year 7.7%; nominal growth 8.9%
• Union Budget had assumed 10.1% nominal growth
• RBI June MPC growth projection cut to 6.6% (from 6.9%) for 2026-27

🔑 Key Term: Nominal vs real GDP — nominal output includes price changes; the gap (GDP deflator) reflects inflation, and low nominal growth squeezes tax revenue and the fiscal arithmetic.