India's real GDP grew at a robust 7.8% in the third quarter of FY 2025-26, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI). This represents an improvement from the 7.4% growth recorded in the corresponding period of the previous year. The growth estimate for the July–September quarter of 2025-26 has been revised upward to 8.4% from the earlier 8.2%, while the estimate for the April–June quarter has been lowered to 6.7% from the previously reported 7.8%. For the full financial year FY26, real GDP is estimated to grow 7.6%, compared to 7.1% in FY25. In value terms, real GDP is projected at ₹84.54 lakh crore in Q3 FY26, up from ₹78.41 lakh crore in Q3 FY24-25, with nominal GDP estimated to grow 8.6% in FY26. As per ICRA's chief economist Aditi Nayar, the moderation was expectedly driven by agriculture and non-manufacturing industrial sectors, including mining, electricity and construction segments, while manufacturing GVA expanded by double digits for the fifth consecutive quarter.
MoSPI on Friday released the updated annual and quarterly national accounts estimates based on the 2022-23 base year, replacing the earlier series that used 2011-12 as the reference year. This marks a major statistical shift as the new series incorporates significant methodological improvements. The revision aims to capture structural changes, incorporate new data sources, improve estimation methodology and enhance coverage and accuracy. Key changes include wider use of new data sources such as Goods and Services Tax data, Public Finance Management System data and e-Vahan vehicle registration data. Double deflation has been introduced for manufacturing and agriculture, while single extrapolation is used for most other sectors. There is also greater reliance on annual surveys such as the Annual Survey of Unincorporated Sector Enterprises and the Periodic Labour Force Survey to better estimate the household and informal sectors. The Supply Use Table framework has been integrated with national accounts to reduce discrepancies between production and expenditure estimates. As per DBS Bank's senior economist Radhika Rao, the momentum in the rebased growth numbers appears to be marginally stronger than the previous trend, with methodological changes expected to have captured updated production structures and improved government data sets.
The economy has maintained steady growth momentum, with real GDP rising by 7.2% in FY 2023-24 and 7.1% in FY 2024-25. Following the base year revision, the manufacturing sector has emerged as a key contributor to the economy's resilience over the past three financial years, with the latest data showing a 13.3% growth rate in Q3 FY26, marking the fifth consecutive quarter of double-digit expansion. The secondary sector grew 10.1% while the tertiary sector achieved a 9.5% growth rate, both contributing significantly to overall economic performance. The primary sector grew 1.7% during the quarter. Within the services segment, the 'Trade, Repair, Hotels, Transport, Communication and Services related to Broadcasting and Storage' category registered growth of 11.2% at constant prices, while the 'Financial, Real Estate & Professional Services' sector in the tertiary category sustained substantial growth at 11.2%. Real Gross Value Added, which reflects economic activity across sectors, is estimated to grow 7.7% in FY26 compared to 7.3% in FY25.
Within the services segment, the 'Trade, Repair, Hotels, Transport, Communication and Services related to Broadcasting and Storage' category registered growth of 11.2% at constant prices in Q3 FY 2025-26. On the expenditure side, Real Private Final Consumption Expenditure reported 8.7% growth during Q3 of FY 2025-26, compared with the 6.0% growth rate in the corresponding period of the previous financial year. Government Final Consumption Expenditure decreased, registering a 4.7% rise in Q3 of FY 2025-26, over the growth rate of 7.6% in Q3 of FY 2024-25. Gross Fixed Capital Formation recorded 7.8% growth rate at Constant Prices, over the growth rate of 6.3% in Q1 of FY 2024-25. The overall economic performance in FY 2025-26 has been supported mainly by strong real growth recorded in the second quarter at 8.4% and in the third quarter at 7.8%. A base year revision does not change the actual size of the economy in real terms but updates the statistical framework to reflect the current structure of the economy, allowing for more accurate presentation of growth, sectoral performance, consumption and investment trends.
The new base year revision has significant implications for fiscal planning and economic projections. As per ICRA's analysis, the data for FY2023-25 has been revised materially as per the new 2022-23 base, with the size of the Indian economy estimated to be somewhat smaller than that as per the 2011-12 base. The nominal GDP for FY2024 and FY2025 is 3.8% each lower than that estimated in the old series, while the SAE for FY2026 is 3.3% lower than the FAE as per the old series. This implies that the fiscal deficit-to-GDP ratio would be ~15-20 bps higher on an average during these years as compared to the previous estimates. More importantly, this would also imply a fiscal deficit target of 4.46% of GDP for FY2027, as against the 4.3% assumed in the budget, assuming a nominal GDP growth of ~10% in the fiscal. Saurabh Garg, secretary in the Ministry of Statistics and Programme Implementation, explained that the revision was delayed due to major structural changes and disruptions, noting that GST introduction and COVID intervention were key factors that prevented earlier implementation. Officials indicate the revision will be undertaken every five years or so, with updated and reliable data now available for the current implementation.