New Delhi (ABC Live): India GDP 2025–26: India is projected to record 7.4% real GDP growth in FY 2025–26, according to the First Advance Estimates released by the National Statistics Office under the Ministry of Statistics & Programme Implementation. At first glance, this projection reinforces India’s position as the world’s fastest-growing major economy.

At the same time, headline growth figures often compress complex economic realities into a single number.

Viewed across sectors, consumption trends, investment patterns, and trade balances, the data reveals a more layered picture. Growth remains resilient, yet it is also narrowly anchored, leaning heavily on services and public spending while household demand and employment depth continue to lag.

For this reason, the ABC Live explainer unpacks what the data confirms, what it obscures, and why the 7.4% figure calls for careful interpretation rather than unqualified celebration.

Official source (PIB / MoSPI):
https://static.pib.gov.in/WriteReadData/specificdocs/documents/2026/jan/doc202617752701.pdf

Headline GDP Numbers: Growth Is Strong, Price Momentum Is Not

According to the official estimates:

• India GDP 2025–26 : 7.4%

• Nominal GDP growth: 8.0%

• Real GVA growth: 7.3%

The narrow gap between real and nominal growth is instructive. Instead of signalling strong pricing power, the numbers indicate that disinflation has materially lifted real growth.

From a practical standpoint, output is expanding faster partly because inflation has softened, not because demand has surged. That distinction matters when assessing income durability and future momentum.

A similar pattern appeared in earlier growth cycles, where subsequent revisions reduced headline optimism—an issue analysed in
👉 Explained: The Real Story Behind India’s 8.2% GDP Growth
https://abclive.in/2025/11/29/explained-the-real-story-behind-indias-8-2-gdp-growth/

Sectoral Growth: Services Continue to Carry the Economy

Why Services Dominate the Growth Profile

Services now contribute over 56% of nominal GVA, firmly establishing the sector as the primary engine of expansion. Within this segment:

• Financial, Real Estate & Professional Services grow 9.9%

• Public Administration, Defence & Other Services grow 9.9%

• Trade, Transport & Communication grow 7.5%

Importantly, two of the fastest-growing segments are state-linked and policy-supported. Although this configuration stabilises aggregate growth, it does not generate employment at scale or deepen productivity across the economy.

Primary Sector: Growth Remains Muted

In contrast, the primary sector expands by only 2.7%, while mining contracts by 0.7% in real terms.

Given that agriculture and allied activities employ a large share of India’s workforce, this weak performance constrains rural incomes and suppresses consumption demand. Consequently, GDP expansion does not translate evenly across households.

Manufacturing and Industry: Improvement Without a Breakthrough

Manufacturing posts 7.0% growth, marking an improvement over the previous year. Even so, this gain coincides with:

• Sluggish performance in electricity and utilities

• Moderation in construction growth

Taken together, these signals suggest that industrial expansion remains selective and investment-led, rather than driven by mass consumer demand.

Demand-Side Trends: Why Consumption Is Not Leading Growth

Private Consumption Tracks Growth, but Does Not Drive It

Private Final Consumption Expenditure (PFCE) grows 7.0%, broadly in line with GDP. Despite this, its share in GDP remains flat at around 56%.

Such a pattern indicates that household spending has stabilised but not accelerated. At the same time, rural and lower-income demand continues to face constraints, limiting the consumption multiplier.

Without a sustained pickup in spending, growth risks remaining numerically strong but socially shallow.

Investment: Public Capital Spending Still Bears the Load

Gross Fixed Capital Formation rises 7.8%, marginally higher than last year. Even with this improvement, public infrastructure spending remains the primary driver of investment momentum.

Private investment has recovered only partially. Over time, this imbalance could reduce capital efficiency unless consumption and exports help offset the returns.

External Sector: A Quiet Warning Signal

One of the clearest stress points emerges in the trade data:

• Imports expand by 14.4% in real terms

• Exports grow by only 6.4%

Such divergence signals that domestic demand is becoming increasingly import-intensive. If sustained, this trend could widen trade deficits, heighten exposure to global shocks, and dilute net growth gains.

A detailed breakdown is available in
👉 Explained: India’s Trade Performance 2025
https://abclive.in/2025/10/16/explained-indias-trade-performance-2025/

India in Global Context: Fastest Growth, Narrowest Base?

Projected Real GDP Growth (FY 2025–26)

India clearly outpaces its peers. Growth composition, however, tells a different story.

While advanced economies rely on services backed by high incomes and social security, and China leans on manufacturing depth, India increasingly resembles a service-heavy economy without equivalent employment absorption or income security.

Methodology Matters: Why Revisions Are Likely

These figures are advance, indicator-based estimates, compiled using partial-year data. In parallel, a base-year revision to FY 2022–23 is already underway.

Revised estimates, scheduled for February 2026, often rebalance sectoral weights and temper early optimism. For this reason, the current projection should be treated as a directional signal rather than a final verdict.

What Policymakers Should Take Away

What the Data Confirms

• Macroeconomic stability remains intact

• Services continue to cushion volatility

• Public investment anchors growth momentum

What the Data Warns

• Employment growth lags output growth

• Rural incomes remain constrained

• Consumption depth is limited

• Import dependence is rising

Conclusion: India’s GDP 2025026 Growth Is Real, but It Is Not Yet Broad-Based

India’s projected 7.4% GDP growth reflects resilience in a challenging global environment. However, resilience alone does not amount to transformation.

Even as the economy expands, the engines of inclusive growth—manufacturing jobs, rural income gains, and household consumption—remain underpowered. Without progress on these fronts, India risks settling into a pattern of high growth with limited social depth.

Ultimately, the decisive test will arrive with the Second Advance Estimates and base-year revisions in February 2026, when today’s optimism meets fuller and revised data.

Editorial Disclosure | ABC Live

This report is based on the First Advance Estimates of Gross Domestic Product for FY 2025–26 released by the National Statistics Office. These estimates are provisional, compiled using partial-year indicators and an outgoing base year (2011–12).

As formally disclosed by the government, the estimates will be revised with updated data, benchmarking, and a new base year (2022–23) in February 2026. ABC Live does not dispute the authenticity of the official data. However, this analysis independently examines the composition, drivers, and sustainability of the projected growth rate.

Readers should interpret the headline GDP figure as an early macroeconomic signal rather than a final outcome.

How ABC Live Verified This Report

• Official PIB / MoSPI GDP First Advance Estimates (FY 2025–26)
  https://static.pib.gov.in/WriteReadData/specificdocs/documents/2026/jan/doc202617752701.pdf

• Cross-checked sectoral, expenditure, and trade tables

• Compared trends with prior GDP revision cycles

• Linked relevant ABC Live explainers for continuity and context

ABC Live Internal Reading

• Explained: India’s Trade Performance 2025
  https://abclive.in/2025/10/16/explained-indias-trade-performance-2025/

• Explained: The Real Story Behind India’s 8.2% GDP Growth
  https://abclive.in/2025/11/29/explained-the-real-story-behind-indias-8-2-gdp-growth/