India’s economy has demonstrated remarkable resilience, achieving a robust 7.8% growth in the fourth quarter of the 2025-26 financial year. This performance has propelled the full-year GDP growth to 7.7%, slightly surpassing earlier projections of 7.6%. The latest data underscores India’s position as one of the world’s fastest-growing major economies, even amid global uncertainties.
**Quarterly Performance**
In the January-March quarter, India’s real GDP was estimated at ₹87.77 lakh crore, up from ₹81.40 lakh crore in the same period the previous year. This 7.8% year-on-year growth was driven by significant expansions across various sectors. Trade, hotels, transport, communication, broadcasting, and storage services led the growth with a 12.5% increase. Financial, real estate, and professional services followed with a 10.4% rise. Manufacturing and construction sectors also contributed positively, growing by 7.3% and 8.4%, respectively.
Nominal GDP for the quarter was estimated at ₹94.65 lakh crore, reflecting a 9.1% increase over the previous year. For the entire fiscal year, real GDP reached ₹323.12 lakh crore, up from ₹299.89 lakh crore in FY 2024-25, marking a 7.7% growth. Nominal GDP for the year was estimated at ₹346.36 lakh crore, an 8.9% increase from the previous fiscal year.
**Sectoral Contributions**
The services sector was a major contributor to the economic growth. Within the tertiary sector, financial, real estate, and professional services, along with public administration, defense, and other services, were projected to post robust growth of 9.9% at constant prices in FY 2025-26. This strong performance highlights the sector’s pivotal role in driving India’s economic expansion.
**Expert Insights**
Economists have expressed optimism about India’s economic trajectory. Sujan Hajra, Chief Economist at Anand Rathi Financial Services, noted that despite a challenging global trade environment, domestic demand has remained strong, enabling India to maintain its status as the world’s fastest-growing major economy. He anticipates that growth may moderate in FY27 due to rising global uncertainties but expects an expansion of around 7% to be achievable, supported by favorable consumption, investment, and policy factors.
Aditi Nayar, Chief Economist at ICRA, highlighted potential risks to growth, including the prolonged impact of elevated energy prices and geopolitical tensions. She also pointed out concerns about the agricultural outlook and rural demand, given the possibility of El Niño conditions and a weak monsoon forecast for 2026. Assuming an average crude oil price of $95 per barrel, ICRA projects GDP growth to slow to below 6.5% in FY2027 from 7.7% in FY2026.
**Economic Survey Highlights**
The Economic Survey 2025-26 projects India’s real GDP growth at 7.4% for FY26 and 6.8–7.2% for FY27, reaffirming the country’s position as the fastest-growing major economy for the fourth consecutive year. The survey attributes this growth to rising investment, stable inflation, improving balance sheets, and structural reforms across manufacturing, infrastructure, services, and the financial system. It also highlights a 7% increase in private consumption in FY26, accounting for 61.5% of GDP, and a 7.8% growth in gross fixed capital formation, with investment holding steady at 30% of GDP. The services sector’s Gross Value Added (GVA) is estimated to rise by 9.1% for the full year, indicating broad-based expansion in both modern and tradable services.
**Conclusion**
India’s economic performance in the fourth quarter of FY 2025-26 and the full fiscal year reflects a resilient and dynamic economy. While challenges such as global uncertainties and potential climatic impacts remain, the country’s strong domestic demand, robust services sector, and ongoing structural reforms provide a solid foundation for sustained growth in the coming years.
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