The Indian economy grew at a better-than-expected 7.8% in the fourth quarter of last financial year 2025-26. The GDP growth for the whole year stood at 7.7% marginally higher than the previous government estimates of 7.6%. India’s economic growth has beaten estimates, especially as experts had expected some impact of the US-Iran conflict to reflect in the headline number.Quarterly sector-wise data showed particularly strong growth in trade, hotels, transport, communication, broadcasting and storage-related services, which expanded 12.5% year-on-year. Financial, real estate and professional services followed with growth of 10.4%. Manufacturing registered an increase of 7.3%, while the construction sector grew by 8.4% during the quarter.At constant prices, real GDP for the January-March quarter is estimated to have been at Rs 87.77 lakh crore, compared with Rs 81.40 lakh crore in the corresponding period of the previous fiscal year. Nominal GDP during the quarter is estimated at Rs 94.65 lakh crore, reflecting growth of 9.1%.For FY 2025-26 as a whole, real GDP is projected to reach Rs 323.12 lakh crore, up from the First Revised Estimate of Rs 299.89 lakh crore for FY 2024-25. This translates into annual growth of 7.7%. Nominal GDP is estimated at Rs 346.36 lakh crore, representing an increase of 8.9% over the previous year.What experts are saying:Sujan Hajra, Chief Economist, Anand Rathi Financial Services said: India’s economy continues to confound the pessimists. Despite a weak global trade environment, domestic demand remained strong enough to keep India the world’s fastest-growing major economy. Growth is likely to moderate in FY27 as global uncertainties rise, but with consumption, investment and policy support remaining favourable, an expansion of around 7% appears well within reach.“Aditi Nayar, Chief Economist at ICRA believes that given the uncertainty around the resolution of the conflict, elevated energy prices for an extended period poses a downside risk to growth in the near term, including muted prospects for investment demand, negative impact on corporate profitability and dampening consumer sentiments.”“Besides, the potential development of El Nino conditions and weak monsoon forecast for 2026 have dulled the agricultural outlook and rural demand prospects for the second half. Assuming an average crude oil price of $95/barrel, ICRA pegs the GDP growth to slow down to sub-6.5% in FY2027 from 7.7% in FY2026.”
