India's Economy Grew 7.7% in FY26, Beating Forecasts
Real GDP growth accelerated from 7.1% a year earlier and exceeded the RBI's 6.6% projection, led by manufacturing, construction and services.
India's economy grew 7.7% in real terms in the 2025-26 financial year (FY26), accelerating from 7.1% the previous year and exceeding the Reserve Bank of India's 6.6% projection, according to figures reported by Businessworld.
Key Highlights
- Real GDP grew 7.7% in FY26, up from 7.1% in FY25.
- Growth beat the RBI's 6.6% forecast.
- Nominal GDP rose 8.9%.
- Gross Value Added (GVA) grew 7.9% in real terms.
- Manufacturing, construction and services led the expansion.
What the Numbers Show
Measured at constant 2022-23 prices, real GDP stood at Rs 323.12 lakh crore in FY26 against Rs 299.89 lakh crore in FY25, Businessworld reported. Nominal GDP rose 8.9% to Rs 346.36 lakh crore, while GVA, a measure of output net of taxes and subsidies, increased 7.9% in real terms.
FY26 growth at a glance
| Measure | FY26 |
|---|---|
| Real GDP growth | 7.7% (up from 7.1%) |
| RBI forecast | 6.6% |
| Nominal GDP growth | 8.9% |
| Real GVA growth | 7.9% |
| Lead sectors | Manufacturing, construction, services |
What Drove Growth
The expansion was led by manufacturing, construction and services. Strong construction and manufacturing typically reflect capital investment and infrastructure activity, while resilient services point to steady domestic demand and India's large IT and business-services base.
The Cautious Outlook
Despite the strong FY26 print, forecasters expect growth to moderate. Bank of Baroda's FY27 outlook, cited by ET, projects growth of 6.6-6.8% amid global uncertainties, and expects the RBI to hold rates at least until October 2026. Rising inflation, covered in our report on June's 17-month high, and Middle East oil risks are among the headwinds.
Who It Affects and How
Workers and job-seekers: Sustained manufacturing and construction activity supports employment, though the quality and spread of jobs remain a policy focus.
Investors: Faster-than-expected growth can bolster corporate earnings expectations and market sentiment.
Government: Higher nominal GDP supports tax revenue and can ease the debt-to-GDP ratio, giving more fiscal room.
Frequently Asked Questions
How fast did India's economy grow in FY26?
Real GDP grew 7.7%, up from 7.1% the previous year.
Did growth beat expectations?
Yes. It exceeded the RBI's 6.6% forecast.
Which sectors led?
Manufacturing, construction and services.
What is the outlook for FY27?
Bank of Baroda projects 6.6-6.8% growth amid global uncertainties.