India's Economy Set for 7.6% Growth in 2025-26, Bolstered by Manufacturing and Services
India's economy is estimated to achieve a growth rate of 7.6% in the fiscal year 2025-26, with the manufacturing and services sectors leading the charge. This projection comes as the National Statistics Office (NSO) released revised data series, adopting a new base year of 2022-23 to better reflect structural changes in the economy.
Resilient Growth Amid Global Challenges
The revised numbers underscore the economy's resilience in the face of trade tensions and geopolitical uncertainties, solidifying India's position as the world's fastest-growing major economy. According to the second advance estimates unveiled on Friday, growth for the current fiscal year has improved to 7.6%, surpassing the earlier estimate of 7.4% from January, which was based on the 2011-12 series. This figure also exceeds the Reserve Bank of India's forecast of 7.4%.
In the October-December quarter, the economy grew by 7.8%, a slight slowdown from the upwardly revised 8.4% in July-September, yet it remains robust. Chief Economic Adviser V Anantha Nageswaran emphasized, "Economic performance remains resilient despite global uncertainties. Three consecutive years of more than 7% growth signal macro resilience." He added that the Economic Survey's projection for FY27 has been revised upwards to a range of 7% to 7.4% under the new data series.
Enhanced Data Accuracy and Structural Revisions
The statistics office highlighted that the new data series captures structural shifts in the economy, incorporates the latest data sources, improves estimation methodologies, and enhances coverage and accuracy, including better representation of the informal sector. Statistics Secretary Saurabh Garg explained, "We have given more focus on having more granular data in this series. A base year revision exercise basically entails capturing structural changes in the economy more effectively, incorporating new data sources, use of better and improved methodologies, and aligning national accounts with international practices."
The government has undertaken a comprehensive revamp of several datasets. An upgraded retail inflation data with a new base year of 2024 was released earlier, and the index of industrial production dataset will also be updated with new data sources and a fresh base year of 2022-23. These changes aim to provide more detailed insights into economic shifts and address criticisms regarding data quality.
Significant Revisions in GDP and Sectoral Performance
The new data series has led to notable revisions in GDP figures. For 2023-24, GDP growth has been adjusted to 7.2% under the new series, down from 9.2% in the old series. Conversely, for 2024-25, it has been upwardly revised to 7.1% from 6.5% in the 2011-12 series. Similar adjustments have been made for quarterly growth numbers for April-June and July-September periods.
A key highlight of the revisions is the dramatic improvement in the manufacturing sector's health. Economists suggest that the old series may have underestimated this critical sector's performance. For instance, manufacturing delivered an impressive 13.3% growth in the third quarter of FY2026, up from 10.8% in the same quarter last year, reflecting a strong rebound in industrial activity.
This robust performance in manufacturing, coupled with steady services growth, positions India for sustained economic expansion, reinforcing its status as a global growth leader amidst challenging international landscapes.
