0.1 What the government has estimated

0.1.1 The Union government has estimated that real GDP growth in FY2025–26 will be 7.4%, higher than the 6.5% growth recorded in FY2024–25.
0.1.2 This estimate has been released as part of the First Advance Estimates (FAE) by the Ministry of Statistics and Programme Implementation.

0.2 What “First Advance Estimates” mean

0.2.1 The First Advance Estimates are early projections of full-year economic growth, based on data available up to that point in the year.
0.2.2 These estimates are important because they form the basis for budget calculations and fiscal ratios.
0.2.3 The Second Advance Estimates will be released on February 27, and Provisional Estimates based on full-year data will be released on May 30.

0.3 Nominal growth versus real growth

0.3.1 The government estimated nominal GDP growth at 8% for FY2025–26.
0.3.2 Nominal growth includes the effect of price changes, while real GDP growth reflects actual expansion in economic activity.

0.4 Quarterly growth pattern in FY26

0.4.1 Growth in the first half of FY26 was stronger, with Q1 growing at 7.8% and Q2 at 8.2%.
0.4.2 Growth in the second half of the year is expected to slow, with average growth falling to 6.8%.
0.4.3 Q3 growth is projected at 7%, while Q4 growth is expected to moderate further to 6.5%.

0.5 Why growth is expected to slow in the second half

0.5.1 The economy is facing external headwinds, particularly due to 50% tariffs imposed by the United States on imports from India.
0.5.2 These tariffs have affected labour-intensive sectors such as apparel, textiles, and engineering goods, which rely heavily on exports.

0.6 Consumption trends in FY26

0.6.1 The government expects Private Final Consumption Expenditure, which captures household spending, to grow at 7% in FY26.
0.6.2 This is slightly slower than the 7.2% growth recorded in FY25, indicating some moderation in consumer demand.
0.6.3 Tax rate cuts, both direct and indirect, were used to support consumption, but the data still show slower growth.

0.7 Sector-wise performance: primary and secondary sectors

0.7.1 The mining and quarrying sector is estimated to contract by 0.7% in FY26, compared to 2.7% growth in FY25.
0.7.2 This indicates weakness in extractive activities during the year.

0.8 Services sector as the main growth driver

0.8.1 The tertiary (services) sector is expected to grow faster, at 9.1% in FY26, up from 7.2% in FY25.
0.8.2 Within services, financial, real estate and professional services are expected to grow at 9.9%.
0.8.3 Public administration, defence and other services are also expected to grow at 9.9%, contributing strongly to overall growth.

0.9 Trade, transport and communication

0.9.1 The trade, hotels, transport and communication sector is expected to grow at 7.5% in FY26.
0.9.2 Although this is slower than some other service segments, it is still an improvement over the 6.1% growth recorded in FY25.

1.0 Investment trends in the economy

1.0.1 Gross Fixed Capital Formation, which reflects investment in infrastructure, machinery and construction, is expected to grow at 7.8% in FY26.
1.0.2 This is faster than the 7.1% growth seen in FY25, indicating continued investment momentum.