India to Remain Growth Leader with 7.4% GDP Expansion in FY 2025-26

India’s economy is projected to grow at a robust 7.4% in the financial year 2025-26, according to advance estimates released by the National Statistical Office (NSO). This marks a significant increase from last year’s 6.5% growth, making India one of the fastest-growing major economies globally. Nominal GDP is expected to expand by 8.0%.

Services Sector Drives Growth
The strong performance is primarily driven by the services sector, which accounts for the bulk of India’s GDP. Within services, financial, real estate, professional services, public administration, and defense are expected to grow by 9.9%, while trade, hotels, transport, communications, and broadcasting may expand by 7.5%.

Manufacturing, Construction, and Agriculture
The secondary sector, including manufacturing and construction, is forecasted to grow at 7.0%, while agriculture and allied activities are expected to see a moderate increase of 3.1%. Utilities such as electricity, gas, and water supply are projected to rise by 2.1%.

Domestic Consumption and Investment
Real private final consumption expenditure is expected to rise by 7.0%, reflecting strong household demand. Gross Fixed Capital Formation (GFCF), a key indicator of investment, is forecasted to grow by 7.8%, up from 7.1% in the previous financial year.

RBI Outlook
The Reserve Bank of India (RBI), in its recent monetary policy review, estimated GDP growth at 7.3% for FY 2025-26. According to the RBI, high-frequency indicators suggest that domestic economic activity remained strong in the third quarter, though early signs of weakness are emerging in certain areas.

Global Comparison
India’s projected growth pace outstrips other major economies, including the US, China, Russia, and Germany, underscoring its position as a global growth leader.