GDP growth projected at 7.4 per cent in FY26 on services, manufacturing boost
India’s economy is estimated to grow 7.4 per cent in FY26 as services and manufacturing accelerate, according to government data released by MoSPI
The Indian economy is estimated to grow by 7.4 per cent in 2025-26, up from 6.5 per cent in the previous fiscal, according to government data released on Wednesday (January 7). The improvement is attributed largely to stronger performance in the manufacturing and services sectors.
As per the first advance estimates of national income released by the Ministry of Statistics and Programme Implementation (MoSPI), manufacturing and construction are both projected to expand by 7 per cent during the fiscal year.
Services emerge as key growth driver
“Buoyant growth in the services sector has been found to be a major driver in the estimated real GVA (gross value added) growth rate of 7.3 per cent in FY 2025-26,” MoSPI said.
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Financial, real estate and professional services, along with public administration, defence and other services, are estimated to grow by 9.9 per cent at constant prices, while trade, hotels, transport, communication and services related to broadcasting are projected to record growth of 7.5 per cent.
The secondary sector is also expected to contribute meaningfully, supported by improved industrial performance and sustained infrastructure spending. Manufacturing output has shown traction, while construction activity remains resilient.
Primary sector sees moderate expansion
In contrast, the primary sector is projected to witness relatively slower growth. Agriculture and allied activities are estimated to expand by 3.1 per cent in 2025-26, while electricity, gas, water supply and other utility services are expected to grow by 2.1 per cent.
The ministry noted that these segments are lagging behind industry and services in terms of momentum.
Consumption, investment support demand
On the expenditure side, private consumption continues to anchor demand. Real private final consumption expenditure (PFCE) is estimated to grow by 7 per cent, reflecting steady household spending.
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Investment activity also remains robust, with gross fixed capital formation (GFCF) projected to rise by 7.8 per cent, compared with 7.1 per cent in the previous year.
Nominal GDP rises
Nominal GDP, or GDP at current prices, is estimated to grow by 8 per cent in 2025-26 to Rs 357.14 lakh crore, up from Rs 330.68 lakh crore in the previous fiscal.
Nominal GVA is projected to increase by 7.7 per cent, while per capita GDP is estimated at Rs 1,42,119, registering year-on-year growth of 6.5 per cent.
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The advance estimates, compiled using the benchmark-indicator method, draw on sector-specific indicators such as industrial output, corporate financials, agricultural production, transport activity, bank credit, GST collections and trade data.
MoSPI cautioned that the figures may be revised as the base year of national accounts is shifted from 2011-12 to 2022-23, with the second advance estimates scheduled for release on February 27, 2026.