New Delhi, January 7: India’s economy is estimated to grow by 7.4 per cent in real terms in the financial year 2025–26, up from 6.5 per cent in FY25, according to the First Advance Estimates released by the National Statistics Office (NSO) on Wednesday.
Reacting to the data, Prime Minister Narendra Modi said that “India’s Reform Express continues to gain momentum”, driven by the NDA government’s investment-focused and demand-led policies. In a post on X, the Prime Minister said the government is working to realise the vision of a prosperous India through sustained reforms in infrastructure, manufacturing incentives, digital public goods, and ease of doing business.
According to the NSO, Real GDP is projected to reach Rs 201.90 lakh crore in FY26, compared to Rs 187.97 lakh crore in FY25 (provisional estimates). Nominal GDP, measured at current prices, is estimated to grow by 8 per cent, reaching Rs 357.14 lakh crore, up from Rs 330.68 lakh crore last year.
The Real Gross Value Added (GVA) is estimated at Rs 184.50 lakh crore, reflecting a growth rate of 7.3 per cent, while Nominal GVA is projected to grow by 7.7 per cent to Rs 323.48 lakh crore.
Services Sector Leads Growth
The NSO said the growth momentum is being largely driven by the services sector, with real GVA projected to expand by 7.3 per cent. Key segments such as financial, real estate and professional services, along with public administration, defence and other services, are estimated to grow by a robust 9.9 per cent.
The secondary sector, including manufacturing and construction, is expected to grow by 7.0 per cent, while trade, hotels, transport, communication and broadcasting services are projected to expand by 7.5 per cent. In contrast, agriculture and allied activities are estimated to grow at a more moderate 3.1 per cent.
Investment Remains the Key Driver
On the demand side, Gross Fixed Capital Formation (GFCF)—a key indicator of investment activity—is projected to grow by 7.8 per cent, up from 7.1 per cent in the previous fiscal year. Private Final Consumption Expenditure (PFCE) is estimated to rise by 7.0 per cent, indicating steady household spending.
Economists Flag Strong Real Growth, Low Inflation Impact
Economists noted that while real growth remains strong, low inflation has narrowed the gap between nominal and real GDP growth.
Dharmakirti Joshi, Chief Economist at Crisil, said the 60-basis-point gap between nominal and real GDP growth is the lowest since 2011–12, reflecting subdued price pressures. He added that growth has been supported by accommodative fiscal and monetary policies, resilient corporate balance sheets, favourable monsoons, and low crude oil prices.
DK Srivastava, Chief Policy Advisor at EY India, said the unexpectedly low implicit price-deflator inflation of 0.5 per cent has implications for budget calculations, though it does not alter the fiscal deficit target of 4.4 per cent of GDP, budgeted at Rs 15.7 lakh crore.
Dr Manoranjan Sharma, Chief Economist at Infomerics Ratings, said India’s growth momentum is underpinned by sustained public capital expenditure, resilient domestic consumption, improving investment cycles, and strong performance in services such as IT, finance, and tourism. However, he cautioned that risks remain from global economic uncertainty, agriculture’s weather dependence, and potential inflationary pressures.
Despite these challenges, economists said India’s large domestic market, favourable demographics, and continued public investment provide resilience and support to economic growth.
India’s economy to grow by 7.4% in FY26, driven largely by service sector: NSO Data
New Delhi [India], January 7 (ANI): The Real GDP has been estimated to grow by 7.4% in the Financial year 2025-26 against the growth rate of 6.5% during FY 2024-25, as per the first advance estimates released by the National Statistics Office (NSO) on Wednesday.The Nominal GDP is estimated to grow at 8% in FY 2025-26, it said.
Real GDP is estimated to attain a level of Rs 201.90 lakh crore in FY26, against the Provisional Estimates (PE) of GDP for FY25 of Rs 187.97 lakh croreNominal GDP is estimated to reach Rs 357.14 lakh crore in FY 2025-26, up from Rs 330.68 lakh crore in FY 2024-25. Further, the Real Gross Value Added (GVA) is estimated at Rs 184.50 lakh crore in FY 2025-26, up from the Provisional Estimates for FY 2024-25 of Rs 171.87 lakh crore, reflecting a 7.3% growth rate.
Nominal GVA is estimated to reach Rs 323.48 lakh crore in FY 2025-26, up from Rs 300.22 lakh crore in FY 2024-25, reflecting a 7.7% growth rate.Nominal GDP uses current prices, including inflation, while Real GDP adjusts for inflation using base-year prices, showing true output growth.
The NSO said the growth momentum is being driven largely by the services sector, with real Gross Value Added (GVA) projected to expand by 7.3%. Financial, real estate, and professional services, along with public administration, defence, and other services, are estimated to grow by a robust 9.9% at constant prices during the year.
Manufacturing and construction are also expected to support overall growth, with the secondary sector projected to grow by 7.0%, while trade, hotels, transport, communication, and broadcasting services are projected to expand by 7.5%.
In contrast, the agriculture and allied sector is estimated to post a more moderate growth of 3.1%On the demand side, private final consumption expenditure (PFCE) is estimated to grow by 7.0%, reflecting steady household spending. Gross fixed capital formation (GFCF), a key indicator of investment activity, is projected to rise by 7.8%, up from 7.1% in the previous fiscal year. (ANI)
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