New Delhi: The second Advanced Estimates (SAE) and first data with revised base year showed that the Indian economy will grow by 7.6% in 2025-26, and will also grow by 7-7.4% in 2026-27 (according to the Chief Economic Advisor), faster than previously expected.
Both figures highlight the resilience of the Indian economy amid significant global headwinds, with domestic consumption driving the engine of growth.
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The data released on Friday comes after a long-awaited facelift. The National Statistical Office (NSO) on Friday released the figures after changing the base year from 2011-12 to 2022-23. The statistical exercise, after extensive statistical and economic brainstorming, will bring India’s GDP figures more in sync with international standards and also more representative of the statistical resources available in the Indian economy to calculate these figures.
What changes?
Despite the much-needed, large-scale nature of this process, there is little difference from the growth seen in previous data. India’s GDP growth for 2025-26, according to SAE, at 7.6%, is just 20 basis points – one basis point is one hundredth of a percentage point – more than the first advanced estimate (FAE) in the old series released on January 7. Nominal GDP for 2025-2026 is now expected to reach $345.5 million as compared to $357.5 crore in FAE. The real GDP figure for the new series in 2025-2026 is much higher, of course, due to the base shift forward by 11 years.
The decline in nominal GDP also means that the revised estimate of the fiscal deficit for 2025-26 will see a slight upward revision (4.53% of GDP instead of 4.4%). However, the government now also expects higher-than-expected real growth in the fiscal year starting April 1. CEA V Anantha Nageswaran said he now expects real GDP growth to be between 7 and 7.4 per cent in 2026-27. The economic survey released on January 29 expected growth of 6.8% to 7.2%. The Reserve Bank of India, in its Monetary Policy Committee decision issued on February 6, said it would wait for the release of new GDP series data before issuing its full-year GDP growth forecast.
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Growth story 2025-2026
Real GDP growth in the period 2025-2026 is expected to reach 7.6%. The quarterly growth figures for the first three quarters of the fiscal year (ending June, September and December 2025) were 6.7%, 8.4% and 7.8%, respectively. Real gross value added (GVA) – GDP is the total value added plus net indirect taxes – is expected to grow by 7.7% in 2025-26, with the first three quarters showing growth of 7%, 8.6% and 7.8%. Among the major sectors, manufacturing is the best performer in 2025-26 with a growth of 11.5%. Agriculture and allied activities are expected to grow by 2.4% while construction is expected to grow by 7.1%. Services as a whole will grow by 9% in 2025-2026.
The nominal numbers tell a completely different sectoral story. Agriculture growth is expected to be 0.3% in nominal terms, much lower than growth in manufacturing (11.4%) and services (11.7%). To be sure, near-zero nominal growth in agriculture, although a reflection of low food inflation, has deteriorated the terms of trade for the agricultural economy – essentially punishing producers. On a quarterly basis, agriculture saw a year-on-year contraction in nominal terms – a result of contractions in the September and December quarters – while manufacturing and services grew by double digits.
On the spending side, private final consumption spending is expected to grow by 7.7% in 2025-26, while gross fixed capital formation (GFCF) – which measures investment spending – will grow by 7.1%. PFCE and GFCF each have a share of 55.7% and 32% of the total GDP. The PFCE growth figure is much better than in 2023-24 and 2024-25 (5.8% in both years).
Sectoral breakdown of basic review
Reviewing the GDP series of an economy as large and diverse as India is a very academic and voluminous exercise. It took five subcommittees to get the job done. However, one of the tables in the NSO press release gives a useful measure to shed some light on what a base year review actually entails in raw, concrete terms. Appendix I of the press release compares changes in current price values of sectoral GVA figures for 2022-23, 2023-24 and 2024-25 between the old and new GDP series. Agriculture saw the highest upward revision in the new series (6.9%), while trade and repair, hotels and restaurants, transportation, storage, communications, and broadcast-related services saw a 26% decline in their sector-specific GVA between the old and new series. Overall, GVA for 2022-2023 saw a downward revision of 2.9% between the old and new series. Appendix V of the press release provides brief explanations of these changes, which are largely technical in nature.
What do experts say?
Rahul Bajoria, India and ASEAN economist at Bank of America Securities (BofAS), said the headline growth numbers were broadly in line with expectations, but the details held surprises. Growth for 2024-25 came in at 7.1%, above Bank of America’s forecast of 6.5%, while the 2023-2024 figure was revised “significantly lower” to 7.2% from the previously reported 9.2%. “The biggest surprise to us was the downward revision of the nominal GDP base for 2025-2026, from the previous estimate of 2025-2026.” $357 lakh crore $345,000 crore. The adjustment – which is contrary to market expectations of an upward revision – will push the fiscal deficit and debt estimates “modestly higher,” Bajoria said. On monetary policy, Bajoria said the strong growth print gave the RBI little reason to cut interest rates. He expected the central bank to maintain a “long pause on interest rates while supporting liquidity conditions to ensure adequate credit intermediation.”
