Trends & Tides – India FY26 GDP 1st Advance Estimates
The first advance estimates peg India’s FY26 real GDP growth at 7.4% YoY, up from 6.5% YoY in FY25.
The improvement is led by the manufacturing sector, which recorded 7% YoY growth, up from 4.5% YoY in FY25. The services sector also reports robust growth of 8.8% YoY in FY26, driven primarily by a 9.9% expansion in Financial services+. Other sectors, including construction, Trade+, and Public admin+, also register healthy growth. In contrast, the agriculture sector reports lower growth, reflecting erratic rainfall during the monsoon season.
On the demand side, private consumption shows some moderation, easing to 7% YoY from 7.2% in the previous year. Fixed investment remains resilient at 7.8% YoY, supported by the central government’s front-loading of capital expenditure. Net exports (exports minus imports) make a negative contribution to GDP growth in FY26, as import growth outpaces export growth.
Nominal GDP growth moderates to 8% YoY in FY26 from 9.8% YoY in FY25, as the GDP deflator (inflation) declines to 0.5% YoY from 3.1% over the same period.
We expect FY27 GDP growth to moderate to around 6.5% YoY. Downside risks include a volatile external environment and potential trade-war escalations, while upside risks could arise from a pickup in private capital expenditure and a recovery in credit growth.
