India's FY26 growth outlook improves as GDP seen rising 7.4% on services strength

The economy is projected to grow faster in the current financial year, with real gross domestic product (GDP) estimated to expand by 7.4% in FY 2025–26, up from 6.5% in FY 2024–25, according to the First Advance Estimates released on Wednesday by the Ministry of Statistics & Programme Implementation.

The projections, compiled by the National Statistics Office under the Ministry, indicate that buoyant growth in the services sector remains the primary driver of overall economic momentum. Agriculture and utilities are likely to post more moderate gains.

According to the estimates, nominal GDP is projected to grow by 8.0% in FY 2025-26.

On the supply side, real gross value added (GVA) is estimated to grow by 7.3% during the year, supported largely by strong expansion in the tertiary sector. Financial, real estate and professional services, along with public administration, defence and other services, are estimated to register a substantial growth rate of 9.9% at constant prices in FY 2025–26.

Trade, hotels, transport, communication and services related to broadcasting are estimated to grow by 7.5% at constant prices during the year, reflecting continued recovery and expansion in consumption-linked services.

In the secondary sector, manufacturing and construction are estimated to achieve a growth rate of 7.0% in FY 2025–26, indicating steady industrial and infrastructure activity.

By contrast, growth in the primary and utility-related segments is more moderate. Agriculture and allied activities are estimated to grow by 3.1% at constant prices, while electricity, gas, water supply and other utility services are projected to record a growth rate of 2.1% during FY 2025–26.

On the demand side, real private final consumption expenditure (PFCE), a key indicator of household consumption, is estimated to grow by 7.0% during the year.

Investment activity is also projected to strengthen. Gross fixed capital formation (GFCF) is estimated to grow by 7.8% in FY 2025–26, compared with a growth rate of 7.1% in the previous financial year, indicating continued capital expenditure support to economic growth.

The country's real GDP expanded by 7.8% in the first quarter (April-June), accelerating to 8.2% in the second quarter (July-September). The third quarter numbers will be released at the end of February.