India's GDP to grow at 7.4% in FY26: NSO estimates

India’s economy is expected to grow by 7.4% in the financial year ending March 2026, a sharp improvement over the 6.5% expansion recorded last year, according to the first advance estimates released by the National Statistics Office (NSO) on Wednesday.The projection for 2025-26 is higher than the government’s earlier growth forecast of 6.3–6.8%. Data showed that GDP growth in the first half of the current fiscal stood at a strong 8%, indicating resilience in economic activity.
While real GDP growth at constant 2011-12 prices is likely to surpass budgetary expectations, nominal GDP growth is expected to undershoot. The NSO has projected nominal GDP growth at current prices at 8% in 2025-26, lower than the budget assumption of 10.1% and the 10.4% growth recorded in the previous year.The difference between nominal and real GDP growth has been estimated at 60 basis points for the current fiscal, the narrowest gap since 2011-12, reflecting a low-inflation environment. Both wholesale and retail inflation are expected to remain near record lows during the year.
“India’s growth momentum has remained intact even amid heightened global uncertainty driven by tariff-related tensions. This has been supported by accommodative monetary and fiscal policies, healthy corporate balance sheets, above-normal monsoons and soft crude oil prices,” stated Dharmakirti Joshi, Chief Economist at Crisil.Slower-than-anticipated nominal GDP growth could affect government revenues, as tax collections are linked to prices. The advance estimates have been released weeks ahead of the Union Budget, which is scheduled to be presented on February 1.
Analysts, however, believe the government is on track to meet its fiscal deficit target of 4.4% of GDP, aided by higher non-tax revenues and restrained spending. “Although tax revenues may fall short of budgeted levels in FY26, non-tax revenues are expected to be stronger, limiting the impact on total receipts,” said SBI Group Chief Economic Advisor Soumya Kanti Ghosh.He added that overall expenditure is likely to be lower, resulting in a fiscal deficit of ₹15.85 lakh crore against the budgeted ₹15.69 lakh crore. “With the revised GDP numbers, the fiscal deficit as a share of GDP is likely to remain unchanged at 4.4%,” Ghosh said.
On the sectoral front, the services sector is projected to post faster growth of 9.1% in the current fiscal, compared with 7.2% in the previous year. All major services sub-sectors are expected to expand at a quicker pace.In contrast, agriculture is likely to witness a slowdown, with real growth estimated at 3.1% in 2025-26, down from 4.6% a year earlier. Nominal growth in gross value added (GVA) from agriculture and allied activities is projected to slip to a record low of 0.8% from 10.4% last year, largely due to a sharp easing in food price inflation. While subdued inflation has benefited consumers, it has weighed on farm incomes.NSO data showed that India’s real GDP is estimated to rise to ₹201.90 lakh crore in 2025-26 from ₹187.97 lakh crore in the previous year. Nominal GDP is projected to increase to ₹357.14 lakh crore from ₹330.68 lakh crore in 2024-25. Per capita national income is estimated to climb by ₹16,025 to ₹2,47,487 during the current financial year.

(Business Correspondent)