New Delhi: India’s economy grew by 7.7 percent in FY2025-26, faster than the 7.1 percent projected for the previous financial year.
The provisional estimate is also marginally higher than the 7.6 percent that the ministry projected in the second advance estimates in February.Manufacturing and services emerged as the key drivers of growth amid global economic uncertainty, according to provisional Gross Domestic Product (GDP) estimates released Friday by the Ministry of Statistics and Programme Implementation (MoSPI).
The data showed that growth remained robust in the final quarter of the previous fiscal year, with GDP expanding 7.8 percent in the January-March period, indicating that domestic economic activity retained momentum despite concerns over global trade disruptions.Among the key drivers for the growth was the manufacturing sector, which grew at 10.7 percent in real terms, followed by trade, hotels, transport and communication related services at 11 percent and financial, real estate and professional services at 10.4 percent.
Overall, the services sector grew by 9.3 percent, while the secondary sector, comprising manufacturing, construction and utilities grew by 8.8 percent. The primary sector which includes agriculture and allied activities, grew by just 3.2 percent.On the demand side, Private Final Consumption Expenditure (PFCE)–a key measure of household spending–grew 7.7 percent in FY2025-26, up from 5.8 percent in the previous year. Gross Fixed Capital Formation (GFCF), a measure of investment activity, grew by 8.2 percent compared to 6.4 percent growth in FY2024-25.Chief Economic Adviser (CEA) V. Anantha Nageswaran described FY2025-26 growth pattern as broad-based. “The gratifying thing is not only the pickup in services sector growth rate, but also more than double digit growth in the manufacturing sector in two out of the last three years,” he said.The sharp rise in investment, Arya Roy Bardhan, junior fellow at the Observer Research Foundation (ORF), told ThePrint, was particularly encouraging as it “improves the quality of growth by reducing dependence on consumption alone and creating conditions for future productivity gains”.However, he cautioned that weak agricultural growth could constrain rural incomes if it persists.“The Q4 GDP growth of 7.4 percent is a welcome sign, suggesting that economic activity strengthened towards the end of the fiscal year despite an uncertain global backdrop,” Aashi Gupta, associate fellow at the Centre for Social and Economic Progress (CSEP), told ThePrint. She attributed the acceleration largely to strong construction activity and continued resilience in services.However, economists cautioned that sustaining the momentum will require stronger private-sector participation and broader gains in employment and incomes.“The challenge going forward is less about achieving high headline growth rates and more about ensuring that growth translates into stronger job creation, income gains and a more broad-based recovery in private demand,” Gupta said.
