India FY26 GDP Growth Seen At Two-Year High Of 7.4% Despite Trade Frictions
The nominal GDP, which accounts for inflation, is estimated to grow at 8% in the current fiscal.
India's economy is estimated to have expanded at 7.4% in real terms in the financial year 2025-26, the highest level in two years, according to the First Advance Estimates released by the Ministry of Statistics on Wednesday. The growth rate was 6.5% during FY25 and 9.2% in FY24.
The nominal GDP, which accounts for inflation, is estimated to grow at 8% in the current fiscal.
The government said buoyant growth in services sector has been found to be a major driver in India's resilient economic expansion in the face of external pressures like the US tariffs and geopolitical uncertainty. Tertiary activities is projected to grow 7.3%.
Manufacturing and construction in the secondary sector has been estimated to achieve a growth rate of 7% despite trade pressures.
Agriculture and allied sector growth is expected to have slowed to 3.1% from 4.6% last year.
Final figures of FY26 GDP will be released after the financial year ends.
India GDP growth FY26: internal breakup.
Private consumption, which fuels over half of the Indian economy, has been estimated to attain a growth rate of 7%, compared to 7.2% in the previous fiscal.
Gross Fixed Capital Formation, which measures the level of new investments, is projected at 7.8% growth rate, higher than 7.1% last year.
Export growth was marginally higher at 6.4% (from 6.3%), while imports rose 14.4% compared to a 3.7% decline in the previous year.
Real Gross Value Added (GVA), which measures the supply-side contribution in the economy, is projected to grow at 7.3%. Nominal GVA may grow at 7.7%.
Consumption Holding Up
"Indian economy remains resilient on the back of the festive demand and steady improvement in economic activity. Trade agreements with UK, Oman and New Zealand is expected to lift growth higher," said Bank of Baroda economist Jahnavi Prabhakar.
She noted that strong festive sales along with GST rationalisation and income tax cuts are expected to boost the consumption sector. "Even the post festive demand has been holding up. Uptick in demand has already been reflected by recent momentum from some of the high frequency indicators such as auto sales."
The bank's internal projection range for FY26 is 7.4–7.6% and 7% in FY27.
