India’s FY26 GDP growth pegged at 7.4% in first advance estimates
The estimates point to faster expansion after FY25’s growth of 6.5 percent, broadly in line with RBI and global forecasts
Last Updated: Jan 07, 2026, 18:36 IST3 min
Prefer us on Google
Advertisement
India’s economy is estimated to grow 7.4 percent in the financial year 2025-26 (FY26), according to the first advance estimates of Gross Domestic Product (GDP) released by the National Statistics Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI) on January 7. This marks a pickup from 6.5 percent growth in FY25, when economic momentum slowed amid global trade uncertainty following the US tariffs.
GDP measures the total value of goods and services produced in the economy, while real GDP adjusts for inflation to reflect actual growth. The FY26 estimate is based on data available up to November 2025 and will be revised as more information becomes available, MoSPI said.
What the advance estimates show
Advance estimates are early official projections prepared using available data from key economic indicators such as industrial output, corporate earnings, agricultural production, government finances, trade, and consumption trends. They provide the first official snapshot of how the economy is expected to perform in a full financial year, which runs from April to March.
According to the release, real GDP, which measures economic output adjusted for inflation, is estimated at Rs 201.9 trillion in FY26. Nominal GDP, which does not adjust for inflation, is projected to grow 8.0 percent to Rs 357.1 trillion.
On the supply side, gross value added (GVA), a measure of output at the sectoral level, is estimated to grow 7.3 percent, led by the services sector. Financial, real estate and professional services, along with public administration, defence and other services, are expected to grow close to 10 percent, while manufacturing and construction are projected to expand at around 7 percent. Agriculture is expected to grow at a more moderate pace of 3.1 percent.
Consumption and investment remain key drivers
On the demand side, private final consumption expenditure, a proxy for household spending, is estimated to rise 7.0 percent. Gross fixed capital formation, which reflects investment in assets such as factories, infrastructure and machinery, is projected to grow 7.8 percent, higher than the previous year.
This aligns with the government’s economic outlook released on December 29, 2025, which showed GDP growth strengthening to 8.2 percent in the second quarter of FY26, up from 7.8 percent in the first quarter, alongside easing inflation and falling unemployment.
How this fits with earlier projections
The advance estimates are broadly in line with domestic and global expectations. In December, the Reserve Bank of India raised its FY26 growth forecast to 7.3 percent, citing strong domestic demand, softer crude oil prices, front-loaded public capital expenditure and benign inflation.
Rahul Agrawal, senior economist at ICRA Ltd, said the NSO’s first advance estimates were broadly in line with ICRA’s expectations. “The NSO has pegged GDP and GVA growth at 7.4 percent and 7.3 percent, respectively, for FY26,” he said, adding that the estimates imply a moderation in growth in the second half of the year.
According to Agrawal, GDP growth in the second half of FY26 is implicitly estimated at 6.9 percent, compared with nearly 8 percent growth in the first half, reflecting potential pressures from lower government capital expenditure, the impact of US tariffs on exports, and an unfavourable base. He added that nominal GDP growth of 8.0 percent, pegged at Rs 357.1 trillion, is broadly in line with Budget assumptions, limiting risks to the fiscal deficit target.
International agencies have also maintained a relatively optimistic view. The Organisation for Economic Co-operation and Development projects India’s growth at 6.7 percent in FY26, while the International Monetary Fund expects growth of 6.6 percent in calendar year 2026. The Asian Development Bank recently upgraded its 2025 calendar-year growth forecast to 7.2 percent, while projecting 6.5 percent growth for FY26.
What's next?
The advance estimates are based on partial data and will be revised as more information becomes available. The Second Advance Estimates, along with revised quarterly figures using a new base year, are scheduled for release on February 27, 2026.
First Published: Jan 07, 2026, 18:43
Subscribe NowMore from : Photo of the Day
Latest News
Advertisement
Advertisement
Advertisement