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Investment demand drives Q1FY27 growth as consumption loses momentum

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Investment demand drives Q1FY27 growth as consumption loses momentum

Home / Economy / News / Investment demand drives Q1FY27 growth as consumption loses momentum

Gross fixed capital formation growth accelerated to 11.9 per cent in Q1FY27, while private consumption growth slowed to 7.1 per cent from 7.5 per cent in Q4FY26

Auhona Mukherjee 3 min read Last Updated : Aug 31 2026 | 7:40 PM IST

Investment demand gathered pace in the April-June quarter of the financial year 2026-27 (FY27) as gross fixed capital formation (GFCF) accelerated to 11.9 per cent from 10.5 per cent in the fourth quarter of 2025-26 (FY26), according to data released by the National Statistics Office (NSO) on Monday.

The quarterly estimates of gross domestic product (GDP) for FY27 showed that the share of GFCF, which represents investment demand in the economy, in nominal GDP rose by 290 basis points to 34.3 per cent from 31.4 per cent in Q1FY26. Growth in private final consumption expenditure (PFCE) slowed to 7.1 per cent in Q1FY27, compared with 7.5 per cent in Q4FY26 in real terms.

The share of PFCE, which represents consumption demand in the economy, in nominal GDP fell by 20 basis points to 55.6 per cent from 55.8 per cent in the same quarter a year ago. Madan Sabnavis, chief economist at Bank of Baroda, said overall Q1 growth was spearheaded by capital formation, with growth of 20.4 per cent in nominal terms.

“This is a major takeaway as this involves both private and government expenditure with the former being driven by data centres and power besides metals,” Sabnavis said.


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