New Delhi, Jan 7 (PTI) The Indian economy is expected to grow by 7.4 per cent in the current fiscal, maintaining its status as the world’s fastest-growing major economy despite punitive US tariffs and geopolitical tensions.
The First Advance Estimates released by the Ministry of Statistics and Programme Implementation (MoSPI) on Wednesday put GDP growth in 2025-26 (April 2025 to March 2026 fiscal year) at better than 7.3 per cent forecast by the RBI and the government’s initial projection of 6.3-6.8 per cent.
The economy had grown at 6.5 per cent in the previous fiscal.
The better-than-expected showing comes on the back of resilience shown by the economy despite the United States imposing punitive tariffs of 50 per cent on Indian goods, escalating trade tensions and threatening to disrupt key export sectors.
The Modi government has responded by overhauling GST, which lowered taxes on hundreds of items, and implementing long-delayed labour reforms. These, together with the lower income tax burden, cut in interest rates, low inflation and strong rural demand, have kept the momentum in the economy.
Last month, the International Monetary Fund projected India’s real GDP growth at 6.6 per cent in fiscal 2026, easing to 6.2 per cent in fiscal 2027, based on the assumption of a prolonged delay in a US-India trade agreement.
The Gross Domestic Product (GDP) had expanded by 9.2 per cent during 2023-24.
The First Advance Estimates of national income, released by the government on Wednesday, also showed that Gross Value Added (GVA) is estimated to grow at 7.3 per cent during the current financial year as against 6.4 per cent in the year-ago period.
The manufacturing sector is expected to post a 7 per cent growth (GVA) 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, according to data released by the National Statistics Office (NSO), Ministry of Statistics & Programme Implementation (MoSPI).
Growth in the agriculture and allied sector moderated to 3.1 per cent in the current fiscal from 4.6 per cent in 2024-25.
“Real GDP or GDP at constant prices is estimated to attain a level of Rs 201.90 lakh crore in FY 2025-26, against the provisional estimates (PE) of GDP for FY 2024-25 of Rs 187.97 lakh crore, registering a growth rate of 7.4 per cent,” NSO said.
The nominal GDP, which factors in inflation, is estimated to attain a level of Rs 357.14 lakh crore in 2025-26 against Rs 330.68 lakh crore in 2024-25, showing a growth rate of 8 per cent. The government had estimated the nominal GDP expansion at 10.1 per cent in the Union Budget presented in February last year.
The First Advance Estimates are used in preparation of the Union Budget, likely to be presented on February 1.
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.
The NSO’s GDP estimate for the current fiscal is marginally higher than the Reserve Bank’s projection of 7.3 per cent.
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.
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.
Commenting on the data, Rahul Agrawal, senior economist, ICRA, said the rating agency does not expect fiscal slippage over the targeted 4.4 per cent of GDP, as higher-than-budgeted non-tax revenues and likely expenditure savings would provide a buffer against the expected miss on taxes.
Dharmakirti Joshi, Chief Economist, Crisil, said the growth in real GDP this fiscal will be 7.4 per cent, nearly 100 basis points higher than anticipated at the start of the fiscal year.
“India’s growth momentum has sustained despite elevated global uncertainty due to tariff tensions, riding on accommodative monetary and fiscal policies, robust corporate balance sheets, and favourable developments such as above-normal monsoons and low crude oil prices,” he said.
Jahnavi Prabhakar, Economist, Bank of Baroda, said the Indian economy remains resilient on the back of festive demand and steady improvement in economic activity.
Strong festive sales, along with GST rationalisation 2.0 and income tax cuts, are expected to boost the consumption sector. Even the post-festive demand has been holding up, Prabhakar said. PTI NKD ANU CS ANZ BAL
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