Govt projects 7.4% GDP growth

Amid churning of global economic growth and tight financial conditions due to imposition of Trump tariff, India on Wednesday projected economic growth of 7.4 per cent in fiscal 2025-26, underscoring resilience in Asia’s third-largest economy.

According to the first advance estimates of national income released by the Ministry of Statistics & Programme Implementation (MoSPI), the projection is higher than the Reserve Bank of India’s (RBI) latest expectation of 7.3 per cent, beating last year’s 6.5 per cent growth. Nominal GDP, which counts inflation, is expected to grow by 8 per cent in the current fiscal year, against 9.7 per cent last year.

These numbers will form the base for the federal Union Budget due to be announced on February 1. Once the GDP estimate is released, the Government assumes a certain level of nominal GDP growth for the next year. This, in turn, determines how much fiscal deficit is feasible and how much tax growth can be expected.

A report by Goldman Sachs said inflation is likely to firm up, leaving limited scope for the RBI to cut rates further. The foreign brokerage firm estimated that India’s GDP growth rate is expected to moderate to 6.8 per cent in FY27 from 7.3 per cent in FY26. “We expect India’s real GDP to grow at 6.7 per cent in (calendar year) 2026 and 6.8 per cent in FY27,” the report said.

Goldman Sachs said the overall private capital expenditure or new investments, which help accelerate growth, have remained subdued in recent years, and added that the US tariff impinged on the capex in 2025. Observing that there are “constraints” on the policy front, the report said the headline inflation will come at 3.9 per cent in 2026, very close to the RBI’s 4 per cent, leaving limited scope for rate cuts by the central bank. “A further 0.25 per cent cut remains possible if US tariff-related uncertainty persists beyond Q1 and impinges on growth,” it added.

According to the MoSPI estimates, in US dollar terms, the GDP is likely to be USD 3.97 trillion (1 USD = Rs 90). According to the World Bank’s China economic update issued in December, the country is estimated to grow at 4.9 per cent in 2025 and 4.4 per cent in 2026. Despite global headwinds, the Indian economy has been on a steady trajectory, and the Government has come out with various reform measures this fiscal, including income tax relief and a reduction in GST rates.

The data shows that India’s economy is holding strong at a time of global uncertainty, with growth fueled by resilient services, accelerating investment and targeted Government spending. Rising industrial output, improving credit flows and deeper market reforms are helping the country sustain momentum, positioning it among Asia’s fastest-growing major economies even as external pressures mount.

According to the estimates, manufacturing and construction are estimated to achieve a growth rate of 7 per cent in the current fiscal, up from 4.5 per cent in 2024-25. The growth in the services sector has been estimated at 9.1 per cent versus 7.2 per cent in 2024-25. Growth in the agriculture and allied sector moderated to 3.1 per cent in the current fiscal from 4.6 per cent in the 2024-25.

“Real Gross Domestic Product (GDP) or GDP at Constant Prices is estimated to attain a level of INR 201.90 lakh crore in FY 2025-26, against the Provisional Estimates (PE) of GDP for the FY 2024-25 of INR 187.97 lakh crore, registering a growth rate of 7.4 per cent. Nominal GDP or GDP at Current Prices is estimated to attain a level of INR 357.14 lakh crore in the FY 2025-26, against INR 330.68 lakh crore in FY 2024-25, showing a growth rate of 8.0 per cent.

“Real Gross Value Added (GVA) is estimated at INR 184.50 lakh crore in the FY 2025-26, against the Provisional Estimates (PE) for the FY 2024-25 of INR 171.87 lakh crore, registering a growth rate of 7.3 per cent. Nominal GVA is estimated to attain a level of INR 323.48 lakh crore during FY 2025-26, against INR 300.22 lakh crore in FY 2024-25, showing a growth rate of 7.7%”, as per the estimates. “Buoyant growth in the services sector is a major driver in the estimated real GVA (gross value added) growth rate of 7.3 per cent in FY 2025-26,” MoSPI said.

The real private final consumption expenditure (PFCE) has been estimated to attain a growth rate of 7 per cent during 2025-26. Gross fixed capital formation (GFCF) has been estimated to have a 7.8 per cent growth rate at constant prices during 2025-26, compared to 7.1 per cent in the previous financial year.

The data showed Financial, Real Estate & Professional Services and Public Administration, Defence & Other Services in the Tertiary Sector have been estimated to attain a substantial growth rate of 9.9% at Constant Prices in FY 2025-26. However, agriculture and allied sectors and ‘electricity, gas, water supply and other utility services’ sectors are estimated to witness a moderate growth rate in the current fiscal ending March 31. The advance estimates data is used in preparation of the Union Budget, likely to be presented on February 1.