Government Expects GDP Growth Outlook of 7.4% for 2025-26

The government has projected real GDP growth of 7.4% for the financial year 2025-26, up from 6.5% in 2024-25. The First Advance Estimates (FAE), released by the Ministry of Statistics and Programme Implementation on January 7, 2026, also suggest nominal GDP growth of 8% for the year.

The FAE and the Second Advance Estimates, due on February 27, provide early projections of the economy based on available data. The Provisional Estimates, incorporating full-year data, will be released on May 30, 2026. These early estimates are particularly crucial as they form the basis for calculations in the Union Budget.

Quarterly Growth Trends

With 7.8% growth in Q1 and 8.2% in Q2, the government’s full-year projection of 7.4% implies a slowdown in the second half, with average growth expected at 6.8%. The Reserve Bank of India had earlier forecast overall GDP growth at 7.3%, with 7.0% in Q3 and 6.5% in Q4.

Sector-Wise Performance

• Manufacturing: Expected to accelerate to 7% growth from 4.5% in 2024-25.
• Agriculture: Likely to slow to 3.1%, down from 4.6% previously.
• Mining & Quarrying: Projected to contract by 0.7%, reversing last year’s 2.7% growth.
• Services/Tertiary Sector: Forecast to expand at 9.1%, up from 7.2%. Sub-sectors such as financial, real estate, and professional services, and public administration, defence, and other services, are each expected to grow 9.9%.
• Trade, Hotels, Transport & Communication: Projected growth of 7.5%, up from 6.1% in 2024-25.

Also Read: Small Savings Rates For January - March 2026: PPF, NSC, SCSS, SSY And More

Consumption and Investment

• Private Final Consumption Expenditure, a key measure of consumer spending, is expected to rise 7%, slightly below last year’s 7.2%.
• Gross Fixed Capital Formation, reflecting investment, is likely to grow 7.8%, up from 7.1% in 2024-25.

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