FY26 growth estimate raised to 7.7%, RBI trims FY27 outlook
GDP growth in the last quarter of the year, or January-March 2026, declined slightly to 7.8% from 8% in October-December 2025.
The Indian economy ended 2025-26 on an unexpectedly strong note, with the GDP estimated to have grown 7.7% on the back of higher growth in investments, the Ministry of Statistics and Programme Implementation (MoSPI) said on Friday.
GDP growth in the last quarter of the year, or January-March 2026, declined slightly to 7.8% from 8% in October-December 2025 – revised upwards from 7.8% – despite the West Asia war overlapping with the final month.
Marginal revisions have also been made to the GDP growth estimates for April-June 2025 (6.7% to 6.8%) and July-September 2025 (8.4% to 8.3%).
The full-year GDP growth figure of 7.7% released Friday, called the provisional estimate, is higher than MoSPI’s second advance estimate of 7.6% announced in February. India’s GDP had grown by 7.1% in 2024-25.
“India’s growth momentum remains strong!” Prime Minister Narendra Modi said in a post on X. “GDP growth rate of 7.7% in FY 2025-26 and 7.8% in Q4 of FY 2025-26 reflect the inherent strength of our economy, the success of reforms and the hard work of 140 crore Indians. We shall leave no stone unturned to further ‘Ease of Living,’ ‘Ease of Doing Business’ and increase opportunities for our youth.”
While growth in the Gross Value Added (GVA) by the agriculture sector eased to 3% in 2025-26 from 4.2% the previous year, the manufacturing sector expanded at a double-digit rate of 10.7%, up from 9.3% in 2024-25.
The services sector also grew at a faster clip last year, with the category of ‘trade, hotels, transport, communication and services related to broadcasting and storage’ growing 11% as against 6.6% in 2024-25, “reflecting the trend of higher mobility in the economy and higher travel and tourism activity”, said Madan Sabnavis, Chief Economist at Bank of Baroda.
Meanwhile, financial, real estate, IT and professional services saw their GVA increase 10.4%, up from 10%.
On the whole, real GVA growth in 2025-26 rose to 7.9% from 7.3% the previous year.
GVA measures the value addition, or the difference in value of output produced and the value of input used. It is also calculated by subtracting net product taxes from the GDP.
“The fact that GVA growth at 7.9% outpaced GDP growth suggests that India’s expansion was not solely demand-driven but also backed by strong production momentum,” said Rumki Majumdar, Economist at Deloitte India. “Performance across services, manufacturing and construction indicates that the economy has entered a period of global uncertainty from a position of strength, which should help it better absorb potential supply-side shocks.”
Last year, Private Final Consumption Expenditure increased 7.7%, sharply higher than the 5.8% growth recorded in 2024-25. Gross Fixed Capital Formation – a proxy for investments – also rose at a faster rate of 8.2% as against 6.4%. Investment growth was particularly strong in the January-March 2026 quarter, rising to a 13-quarter high of 10.8%.
The latest GDP data came hours after the Reserve Bank of India (RBI) cut its forecast for 2026-27 to 6.6% from 6.9%, with Governor Sanjay Malhotra warning that while domestic demand remains resilient and manufacturing and services sectors activity continue to expand, “there are incipient signs of moderation in some sectors”.
As per the central bank’s latest forecast, growth is seen at 6.6% in April-June 2026, 6.3% in July-September 2026, 6.5% in October-December 2026, and 6.8% in January-March 2027. In April, the central bank had expected the country’s GDP to increase by 6.8%, 6.7%, 7%, and 7.2% in the four quarters of 2026-27.
While the Indian economy entered the West Asia war on a strong footing, economists widely expect growth to slow down meaningfully in the coming months – as indicated by RBI’s own forecasts.
According to Devendra Kumar Pant, Chief Economist at India Ratings & Research, the higher energy prices and weak rupee due to the conflict as well as weaker rainfall because of El Nino “is likely to have an impact on India’s growth-inflation dynamics”. Pant expects GDP growth to slow down to 6.7% in 2026-27 and inflation to increase to 5%, broadly in line with what the RBI has predicted.
“Markets are likely to move on from the backward-looking data and focus on potential spillover risks into FY27, particularly given the prospect of a prolonged disruption in the supply of critical inputs to downstream industries, higher energy as well as food costs impacting purchasing power and tighter financial conditions,” said Radhika Rao, Senior Economist at DBS Bank.
The Indian economy ended 2025-26 on an unexpectedly strong note, with the GDP estimated to have grown 7.7% on the back of higher growth in investments, the Ministry of Statistics and Programme Implementation (MoSPI) said on Friday.
GDP growth in the last quarter of the year, or January-March 2026, declined slightly to 7.8% from 8% in October-December 2025 – revised upwards from 7.8% – despite the West Asia war overlapping with the final month.
Marginal revisions have also been made to the GDP growth estimates for April-June 2025 (6.7% to 6.8%) and July-September 2025 (8.4% to 8.3%).
The full-year GDP growth figure of 7.7% released Friday, called the provisional estimate, is higher than MoSPI’s second advance estimate of 7.6% announced in February. India’s GDP had grown by 7.1% in 2024-25.
“India’s growth momentum remains strong!” Prime Minister Narendra Modi said in a post on X. “GDP growth rate of 7.7% in FY 2025-26 and 7.8% in Q4 of FY 2025-26 reflect the inherent strength of our economy, the success of reforms and the hard work of 140 crore Indians. We shall leave no stone unturned to further ‘Ease of Living,’ ‘Ease of Doing Business’ and increase opportunities for our youth.”
While growth in the Gross Value Added (GVA) by the agriculture sector eased to 3% in 2025-26 from 4.2% the previous year, the manufacturing sector expanded at a double-digit rate of 10.7%, up from 9.3% in 2024-25.
The services sector also grew at a faster clip last year, with the category of ‘trade, hotels, transport, communication and services related to broadcasting and storage’ growing 11% as against 6.6% in 2024-25, “reflecting the trend of higher mobility in the economy and higher travel and tourism activity”, said Madan Sabnavis, Chief Economist at Bank of Baroda.
Meanwhile, financial, real estate, IT and professional services saw their GVA increase 10.4%, up from 10%.
On the whole, real GVA growth in 2025-26 rose to 7.9% from 7.3% the previous year.
GVA measures the value addition, or the difference in value of output produced and the value of input used. It is also calculated by subtracting net product taxes from the GDP.
“The fact that GVA growth at 7.9% outpaced GDP growth suggests that India’s expansion was not solely demand-driven but also backed by strong production momentum,” said Rumki Majumdar, Economist at Deloitte India. “Performance across services, manufacturing and construction indicates that the economy has entered a period of global uncertainty from a position of strength, which should help it better absorb potential supply-side shocks.”
Last year, Private Final Consumption Expenditure increased 7.7%, sharply higher than the 5.8% growth recorded in 2024-25. Gross Fixed Capital Formation – a proxy for investments – also rose at a faster rate of 8.2% as against 6.4%. Investment growth was particularly strong in the January-March 2026 quarter, rising to a 13-quarter high of 10.8%.
The latest GDP data came hours after the Reserve Bank of India (RBI) cut its forecast for 2026-27 to 6.6% from 6.9%, with Governor Sanjay Malhotra warning that while domestic demand remains resilient and manufacturing and services sectors activity continue to expand, “there are incipient signs of moderation in some sectors”.
As per the central bank’s latest forecast, growth is seen at 6.6% in April-June 2026, 6.3% in July-September 2026, 6.5% in October-December 2026, and 6.8% in January-March 2027. In April, the central bank had expected the country’s GDP to increase by 6.8%, 6.7%, 7%, and 7.2% in the four quarters of 2026-27.
While the Indian economy entered the West Asia war on a strong footing, economists widely expect growth to slow down meaningfully in the coming months – as indicated by RBI’s own forecasts.
According to Devendra Kumar Pant, Chief Economist at India Ratings & Research, the higher energy prices and weak rupee due to the conflict as well as weaker rainfall because of El Nino “is likely to have an impact on India’s growth-inflation dynamics”. Pant expects GDP growth to slow down to 6.7% in 2026-27 and inflation to increase to 5%, broadly in line with what the RBI has predicted.
“Markets are likely to move on from the backward-looking data and focus on potential spillover risks into FY27, particularly given the prospect of a prolonged disruption in the supply of critical inputs to downstream industries, higher energy as well as food costs impacting purchasing power and tighter financial conditions,” said Radhika Rao, Senior Economist at DBS Bank.
