India’s economy likely grew 7.6% in FY26 under new GDP series

Quarterly data indicate steady momentum through the fiscal year.

India’s economy likely grew 7.6 percent in FY26, compared with 7.1 percent in the previous fiscal, according to new GDP estimates released on February 27 under the revised national accounts series.

The updated series, which adopts 2022-23 as the new base year, places growth 0.2 percentage point higher than the 7.4 percent expansion estimated under the earlier 2011-12 base series in January

The revision reflects methodological improvements and wider economic coverage.

Growth estimates for earlier years have also been revised upward. The FY25 growth number was revised to 7.1 percent from 6.5 percent earlier, while FY24 growth stood at 7.2 percent compared with 9.2 percent in the previous series.

Quarterly data indicate steady momentum through the fiscal year. The economy expanded 7.8 percent in the third quarter, compared with 8.4 percent in the second quarter and 6.7 percent in the first quarter.

Growth for the first half of the year has also been revised, with Q1 growth now estimated at 6.7 percent and Q2 at 8.4 percent, compared with earlier estimates of 7.8 percent and 8.2 percent respectively.

The revised GDP framework incorporates a broader database of companies, significantly expanding the universe of covered business units. Officials said the methodology also adopts improved estimation techniques, including double deflation and refined extrapolation methods, aimed at better capturing real economic activity across sectors.

The rebasing exercise is expected to improve comparability with current economic structures by reflecting changes in consumption patterns, production dynamics and the growing role of formal sector enterprises in India’s economy.

In response to the GDP numbers, ICRA’s Chief Economist Aditi Nayar said that the shift to the new 2022–23 GDP base series materially alters India’s fiscal math.

“Notably, the size of the Indian economy is 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,” Nayar said.

“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. Further, this would also have some bearing on the debt consolidation roadmap, with the debt-to-GDP pegged 1.9pp higher at 57.5% for FY2027 as against the budgeted target of 55.6%, making the consolidation path unto FY2031 relatively steeper than previously estimated,” ICRA’s Chief Economist further added.