<p>The first advance estimates (FAEs) of gross domestic product (GDP) for Financial Year 2025-26, released by the National Statistics Office (NSO), are more optimistic than most projections, and are set at a 7.4-per cent growth. The Reserve Bank of India (RBI) had projected a growth rate of 7.3 per cent for the current year. While the economy grew 8 per cent in the first half of the year, it is expected to slow down in the second half, possibly on account of a decline in government spending and the impact of the tariff hikes imposed by the United States. But the 7.4 per cent growth estimate is impressive, and is much higher than last year’s 6.5 per cent. Low inflation and improved consumption may have partly driven this trend. But it should be noted that the nominal growth for the year is projected at 8 per cent, which is less than the budget expectation of 10.1 per cent. It would also be the second consecutive year with the nominal growth clocking under 10 per cent. This sluggish growth will have its budgetary implications.</p>.India's GDP to grow at 7.4% in FY26: Govt.<p>The services sector is expected to lead the growth with a sharp spike, from 7.2 per cent in 2024-25 to 9.1 per cent in 2025-26. But other sectors such as trade, hotels, transport and communication, finance, real estate, professional services, and public administration are all expected to show good gains. Trade has not been badly affected by the tariff hikes, but the situation may change in the coming months. The manufacturing sector is projected to improve, but construction and utilities are growing at a slower rate. Consumption and investment activities are likely to do better.</p>.<p>The GDP estimates are based on existing data, available till November, and have been compiled using the existing methodologies. The NSO has plans to release a new GDP series in February, with 2022-23 set as the base year. This is set to expand the data sources and is expected to reflect the state of the economy better. A new series for the consumer price index is expected to be released, along with a series on an index of industrial production. While the new methodologies will change the way the country’s economy and its indicators are measured, the real improvement has to come from the ground. India’s economy will face challenges mainly on the external front. It will be affected by the turbulence at the global level. There is concern over the implications of higher tariffs imposed by the US. The two trade agreements, which are being pursued, will be critical to ensuring stability on the trade front.</p>
<p>The first advance estimates (FAEs) of gross domestic product (GDP) for Financial Year 2025-26, released by the National Statistics Office (NSO), are more optimistic than most projections, and are set at a 7.4-per cent growth. The Reserve Bank of India (RBI) had projected a growth rate of 7.3 per cent for the current year. While the economy grew 8 per cent in the first half of the year, it is expected to slow down in the second half, possibly on account of a decline in government spending and the impact of the tariff hikes imposed by the United States. But the 7.4 per cent growth estimate is impressive, and is much higher than last year’s 6.5 per cent. Low inflation and improved consumption may have partly driven this trend. But it should be noted that the nominal growth for the year is projected at 8 per cent, which is less than the budget expectation of 10.1 per cent. It would also be the second consecutive year with the nominal growth clocking under 10 per cent. This sluggish growth will have its budgetary implications.</p>.India's GDP to grow at 7.4% in FY26: Govt.<p>The services sector is expected to lead the growth with a sharp spike, from 7.2 per cent in 2024-25 to 9.1 per cent in 2025-26. But other sectors such as trade, hotels, transport and communication, finance, real estate, professional services, and public administration are all expected to show good gains. Trade has not been badly affected by the tariff hikes, but the situation may change in the coming months. The manufacturing sector is projected to improve, but construction and utilities are growing at a slower rate. Consumption and investment activities are likely to do better.</p>.<p>The GDP estimates are based on existing data, available till November, and have been compiled using the existing methodologies. The NSO has plans to release a new GDP series in February, with 2022-23 set as the base year. This is set to expand the data sources and is expected to reflect the state of the economy better. A new series for the consumer price index is expected to be released, along with a series on an index of industrial production. While the new methodologies will change the way the country’s economy and its indicators are measured, the real improvement has to come from the ground. India’s economy will face challenges mainly on the external front. It will be affected by the turbulence at the global level. There is concern over the implications of higher tariffs imposed by the US. The two trade agreements, which are being pursued, will be critical to ensuring stability on the trade front.</p>
