The National Statistics Office has forecasted a 7.4% growth for the Indian economy in 2025-26, surpassing earlier expectations. While the first half of the year saw 8% expansion, the second half is expected to moderate to 6.8%. Services sector leads the acceleration, though nominal growth raises fiscal worries.
The first advance estimates from the National Statistics Office indicate that India's economy will expand by 7.4% in 2025-26, outpacing projections from analysts and the Reserve Bank of India at the year's start. This follows an 8% growth in the initial six months, with a projected slowdown to 6.8% in the latter half, potentially influenced by reduced government spending and tariffs imposed by US President Donald Trump on merchandise exports.
Disaggregated figures highlight robust performance in the services sector, forecasted to grow at 9.1% this fiscal year, compared to 7.2% in 2024-25. Growth accelerates across sub-sectors including trade, hotels, transport, communication, financial services, real estate, professional services, and public administration. In industry, manufacturing shows improvement, but construction and utilities lag with slower rates. Consumption and investment are both set to advance steadily.
Despite the positive real growth, nominal GDP is expected to rise by only 8%, below the 10.1% assumed in the Union budget and marking the second straight year under 10%. This subdued nominal expansion could strain government debt and deficit management over time.
These estimates draw from data up to November. Upcoming revisions include a new GDP series based on 2022-23 by month's end, incorporating updated methodologies and data sources. A fresh Consumer Price Index with 2024 base follows in February, alongside a revised Index of Industrial Production, aiming to refine accuracy amid past critiques.
