Last Updated on January 7, 2026 6:26 pm by INDIAN AWAAZ
R. Suryamurthy
India’s economy is estimated to grow 7.4% in the financial year ending March 2026, rebounding from a provisional 6.5% expansion in FY25, according to the First Advance Estimates released by the National Statistical Office (NSO) on Tuesday, underscoring the economy’s resilience amid global trade uncertainty and uneven external demand .
The estimates place India firmly among the fastest-growing major economies, with growth driven largely by services activity and sustained public and private investment, even as agriculture and utilities show more modest gains.
At constant 2011–12 prices, real gross domestic product (GDP) is projected at ₹201.90 lakh crore in FY26, compared with ₹187.97 lakh crore in FY25. Nominal GDP is estimated to rise 8.0% to ₹357.14 lakh crore, reflecting easing inflation alongside steady real activity .
Services power growth
Gross value added (GVA) at basic prices is expected to grow 7.3% in real terms, with the services sector once again providing the bulk of the momentum.
Financial, real estate and professional services, along with public administration, defence and other services, are estimated to expand by a robust 9.9% in real terms. Trade, hotels, transport, communication and services related to broadcasting are projected to grow 7.5%, reflecting steady domestic demand and a recovery in travel- and logistics-linked activity .
Together, tertiary-sector activities are estimated to grow over 9% in real terms, reinforcing a trend in which India’s post-pandemic growth has been increasingly services-led.
Manufacturing and construction, key pillars of the secondary sector, are both projected to grow 7.0% in real terms, supported by government-led infrastructure spending and improving corporate balance sheets. Overall secondary-sector GVA growth is estimated at around 7% .
Agriculture and allied activities are expected to post a relatively modest 3.1% growth, reflecting normalisation after strong earlier years and uneven monsoon outcomes across regions. Utilities, including electricity, gas and water supply, are projected to grow 2.1%, indicating softer industrial demand growth in energy-intensive segments .
Investment and consumption
On the expenditure side, gross fixed capital formation (GFCF), a key indicator of investment, is projected to grow 7.8% in real terms in FY26, up from 7.1% in the previous year, signalling continued capital expenditure by both the public sector and large private firms .
Private final consumption expenditure (PFCE), which accounts for more than half of GDP, is estimated to rise 7.0% in real terms. While consumption growth remains healthy, economists note it is still uneven, with urban demand outperforming rural consumption.
Government final consumption expenditure (GFCE) is projected to grow 5.2% in real terms, reflecting fiscal consolidation even as the state continues to prioritise infrastructure spending over revenue expenditure .
In nominal terms, PFCE is expected to grow 8.2%, while GFCF is projected to rise 8.3%, indicating a relatively balanced contribution of consumption and investment to headline growth.
External sector and income indicators
Exports of goods and services are estimated to grow 6.4% in real terms, while imports are projected to rise sharply by 14.4%, reflecting strong domestic demand and investment-related imports . The widening import bill could weigh on the current account balance in FY26, analysts say, especially if global commodity prices firm.
Per capita GDP at constant prices is estimated at ₹1,42,119 in FY26, up from ₹1,33,501 in FY25, implying real per capita growth of about 6.5%. Per capita net national income is projected to rise 6.3%, pointing to gradual but steady gains in average incomes .
Economists see upside resilience
Economists broadly welcomed the 7.4% projection, describing it as either in line with or slightly above recent expectations. Several analysts said the estimate reflects strong first-half performance, with real GDP growth averaging around 8% in the first two quarters of FY26.
Ratings agencies and private economists have characterised the current phase as a “Goldilocks” period for India, marked by stable growth, easing inflation and improving fiscal metrics. The Reserve Bank of India had earlier revised its FY26 growth forecast upward to 7.3%, citing broad-based momentum across sectors.
Despite external headwinds – including uncertainty over U.S. trade policy, global interest rates and geopolitical risks – analysts say India continues to benefit from strong domestic demand, resilient services exports and a sustained public investment push.
Provisional nature of estimates
The NSO cautioned that the First Advance Estimates are based on partial data and indicators available up to November 2025 and will be revised as more comprehensive information becomes available. The Second Advance Estimates, along with revised GDP numbers for previous years and quarterly data using a new base year of 2022–23, are scheduled for release on February 27, 2026 .
For now, the FY26 projection sets a firm macroeconomic backdrop for the Union Budget 2026–27, with policymakers expected to balance growth support with fiscal consolidation as India seeks to sustain its position as the world’s fastest-growing large economy.