India’s real Gross Domestic Product (GDP) growth rate is projected at 7.4 per cent in the financial year 2025–26, higher than the 6.5 per cent estimated for FY 2024–25, according to the advanced estimates released by the Ministry of Statistics on Wednesday.
The estimates indicate that strong momentum in the services sector remains the key driver of economic expansion. Financial services, real estate, professional services and public administration are projected to record a robust growth of 9.9 per cent at constant prices in FY 2025–26. Trade, hotels, transport, communication and broadcasting-related services are estimated to grow by 7.5 per cent.
Growth in the secondary sector is also expected to remain steady. Manufacturing and construction are projected to expand by 7 per cent during FY 2025–26. The agriculture and allied sector is estimated to grow at a relatively moderate pace of 3.1 per cent.
On the demand side, Real Private Final Consumption Expenditure (PFCE) is projected to rise by 7 per cent in FY 2025–26. This growth is attributed to higher disposable incomes, supported by income tax exemptions announced in the Union Budget 2025–26 and subsequent reductions in Goods and Services Tax (GST) rates across goods and services.
Investment activity is also expected to strengthen. Gross Fixed Capital Formation (GFCF) is estimated to grow by 7.8 per cent at constant prices in FY 2025–26, up from 7.1 per cent in the previous financial year, reflecting sustained capital expenditure and infrastructure development.
The estimates further show that economic momentum has already picked up during the current financial year. India’s GDP growth accelerated to 8.2 per cent in the second quarter (July–September) of FY 2025–26, compared to 5.6 per cent in the corresponding quarter of FY 2024–25.
During the second quarter, the secondary and tertiary sectors recorded growth rates of 8.1 per cent and 9.2 per cent respectively, pushing overall GDP growth above the 8 per cent mark. Manufacturing grew by 9.1 per cent, while construction expanded by 7.2 per cent. Financial, real estate and professional services posted a double-digit growth of 10.2 per cent.
The agriculture and allied sector grew by 3.5 per cent, while electricity, gas, water supply and other utility services recorded a growth of 4.4 per cent in Q2. Real PFCE increased sharply by 7.9 per cent during the quarter, compared to 6.4 per cent a year earlier, indicating improved income and employment conditions.
With growth of 7.8 per cent in the first quarter, India’s real GDP growth for the first half of FY 2025–26 stands at 8 per cent, significantly higher than the 6.1 per cent recorded in the first half of FY 2024–25. Despite global headwinds, including higher US tariffs, India continues to remain the world’s fastest-growing major economy. The International Monetary Fund has projected India to be the only major economy expected to grow above 6 per cent in 2025–26.
