Indian economy beats forecasts with 7.7% GDP growth in FY26; Q4 expands at 7.8%

India's economy grew at a faster-than-expected 7.7% in fiscal year 2025-26, retaining its position as the world's fastest-growing major economy despite global trade and geopolitical uncertainties.

According to provisional estimates released by the government on Friday, real Gross Domestic Product (GDP) growth stood at 7.8% in the fourth quarter (January-March) of FY26, unchanged from the growth recorded in the preceding quarter.

The annual growth rate of 7.7% was higher than the Second Advance Estimate of 7.6% released in February.

"Real GDP or GDP at Constant Prices is estimated to attain a level of Rs 323.12 lakh crore in the 2025-26, against the First Revised Estimate (FRE) of GDP for 2024-25 of Rs 299.89 lakh crore," the Ministry of Statistics & Programme Implementation (MoSPI) said.

Real Gross Value Added grew 7.9% in FY26, while nominal GVA expanded 9.1%.

In the fourth quarter, real and nominal GVA rose 7.9% and 9.9%, respectively.

The secondary and tertiary sectors were the main drivers of growth during the fiscal year, expanding 8.8% and 9.3%, respectively, at constant prices.

The primary sector grew 3.2%, aided mainly by agriculture and fisheries.

Real GDP at constant prices was estimated at ₹87.77 lakh crore in the fourth quarter, up from ₹81.40 lakh crore a year ago. Nominal GDP rose 9.1% to ₹94.65 lakh crore during the quarter.

For the full fiscal year, nominal GDP grew 8.9%.

On the expenditure side, private final consumption expenditure (PFCE) and gross fixed capital formation (GFCF) registered growth of over 7.5% during the fiscal year.

The strong gains in both PFCE and GFCF signal "durable domestic demand and a robust investment momentum heading into FY27," said Rajeev Sharan, Head of Research, Brickwork Ratings.

"Yet today's MPC outcome tempers the optimism," he added.

The Reserve Bank of India (RBI) on Friday lowered its GDP forecast for FY2026-27 to 6.6% from 6.9% estimated in April.

The latest figures are the second quarterly GDP estimates released under the revised national accounts series with base year 2022-23, introduced by the government in February this year.

The growth numbers come amid concerns over global economic uncertainty, including higher tariffs imposed by the United States on Indian goods and elevated crude oil prices due to the West Asia conflict.

The next GDP estimates, for the April-June quarter of FY27, will be released on August 31.