India GDP Growth Forecast: Government Estimates 7.4% Growth in FY26, Economy to Touch ₹357 Lakh Crore

India GDP Growth FY26: A Strong Signal for Economic Momentum

India’s economic outlook remains positive as the central government has projected India GDP growth FY26 at 7.4%, according to the first advance estimates released by the Ministry of Statistics and Programme Implementation (MoSPI). This comes after the economy recorded a growth rate of 6.5% in FY25, indicating renewed momentum despite global uncertainties.

The estimate places India among the fastest-growing major economies, reinforcing confidence ahead of the Union Budget 2026, scheduled to be presented on February 1.

Economy Size to Expand to ₹357 Lakh Crore

One of the most significant takeaways from the advance estimates is the sharp rise in the Indian economy size. The government expects the economy to expand to ₹357.14 lakh crore in FY26, up from ₹330.68 lakh crore in FY25, marking a nominal growth of 8%.

This expansion reflects not just real output growth but also sustained demand across key sectors, making India’s economic scale more resilient in a volatile global environment.

Manufacturing and Services Growth Lead the Way

According to MoSPI, manufacturing and construction sectors are estimated to grow at 7% in FY26. Improved capacity utilisation, infrastructure spending, and policy support are expected to play a crucial role in sustaining this momentum.

However, the real engine of growth continues to be the services sector.

“Buoyant growth in the services sector has been found to be a major driver,” MoSPI noted, projecting real GVA growth of 7.3% for FY26.

Tertiary Sector Set to Surge

The tertiary sector—including financial services, real estate, professional services, public administration, and defence—is expected to post a robust 9.9% growth. Experts say this reflects strong urban demand, digitalisation, and increased government spending.

Agriculture and Utilities Show Moderate Growth

While headline numbers remain strong, not all sectors are performing equally. Agriculture and allied sectors, along with electricity, gas, and water supply, are expected to see moderate growth in the fiscal year ending March 31, 2026.

Economists point out that uneven monsoons and rising input costs could weigh on rural output, making policy support crucial in the coming months.

Why This Matters Right Now

These advance estimates are critical as they form the base for Union Budget calculations. A higher GDP growth outlook gives the government more fiscal space for:

 Infrastructure investment

 Employment generation

 Social welfare spending

At the same time, it sets expectations high for reforms that can sustain long-term growth.

Final Takeaway

The India GDP growth FY26 forecast of 7.4% sends a clear message: the economy is on a stable growth path, powered by services and manufacturing. However, addressing sectoral imbalances, especially in agriculture, will be key to ensuring inclusive and sustainable growth in the years ahead.