India’s economic growth is expected to reach 7.6% in the financial year 2025–26, according to the second advance estimates of gross domestic product (GDP) released by the government on February 27, 2026. The revised figure is higher than the 7.4% projected in the first advance estimates issued in January, which were based on the older 2011–12 base year series.
The updated data series, presented by Statistics Secretary Saurabh Garg and Chief Economic Advisor V. Anantha Nageswaran, incorporates a revised base year of 2022–23 and includes new datasets to improve coverage, representativeness, and granularity.
Revisions to Recent Growth Data
Under the new series:
- Growth for 2023–24 has been revised downward to 7.2% from 9.2% under the old series.
- Growth for 2024–25 has been revised upward to 7.1% from the earlier estimate of 6.5%.
- Growth for 2025–26 is projected at 7.6% under the second advance estimates.
The government also released third-quarter data for 2025–26 under the new series, showing growth at 7.8%, compared to 8.4% in the second quarter and 6.7% in the first quarter.
However, nominal GDP which measures the size of the economy at current prices has been revised downward for the three-year period from 2023–24 to 2025–26. This has implications for fiscal metrics that are calculated as a percentage of GDP.
Sectoral Growth Trends in FY26
According to the second advance estimates, growth patterns across sectors are mixed.
Secondary Sector:
The secondary sector is projected to grow at 9.5% in 2025–26, up from 7.3% in 2024–25. This expansion is largely driven by manufacturing, which is estimated to grow 12.5% compared to 8.3% in the previous year. Construction growth is expected to moderate slightly to 6.9% from 7.1%.
Primary Sector:
The primary sector is expected to slow significantly, with growth projected at 2.8% in 2025–26, down from 5% in 2024–25. Agricultural growth is estimated to ease to 2.5% from 4.3%, while mining and quarrying growth is projected to decline to 5% from 11.2%.
Tertiary Sector:
The services sector is projected to accelerate to 8.9% growth in FY26, compared to 8.3% in the previous year. This improvement is supported by double-digit growth in trade, hotels, transport and communication (10.3%), as well as financial, real estate, IT and professional services (10%).
Impact on Fiscal Indicators
The revised data indicates that India’s nominal GDP is expected to be ₹345.47 lakh crore in 2025–26, around 3.3% lower than the figure estimated under the earlier series. Nominal GDP for 2023–24 and 2024–25 has also been revised downward by approximately 3.8% each.
Economists note that while the absolute fiscal deficit remains unchanged, a lower GDP base mechanically raises fiscal ratios.
D.K. Srivastava, Chief Policy Advisor at EY India, stated that since the fiscal deficit is calculated as a share of GDP, a smaller GDP base pushes the ratio higher. He indicated that the 2025–26 revised estimate (RE) fiscal deficit ratio would increase from 4.36% to 4.51% of GDP due to the updated series.
Similarly, Aditi Nayar observed that the fiscal deficit-to-GDP ratio for the previous year would likely be 15–20 basis points higher on average compared to earlier estimates.
The revised data also affects the government’s debt consolidation roadmap. The debt-to-GDP ratio is now projected at 57.5% for FY27, compared to the earlier budgeted estimate of 55.6%, an increase of 1.9 percentage points.
The government has set a medium-term target of reducing central government debt to 50% of GDP (plus or minus one percentage point) by 2031. A lower nominal GDP base implies that achieving this target may require a steeper fiscal consolidation path than previously anticipated.
Broader Implications
While the revised GDP growth estimate for 2025–26 reflects stronger real economic performance compared to earlier projections, the downward revision to nominal GDP alters the fiscal arithmetic.
The updated base year of 2022–23 is expected to provide a more contemporary and representative measure of India’s economic structure, particularly given structural changes in manufacturing, digital services, and formalisation in recent years.
However, the recalibration of fiscal ratios underscores how statistical revisions can influence perceptions of fiscal sustainability, even when underlying deficit numbers remain unchanged.
The government’s fiscal strategy in the coming years will need to balance growth support with adherence to its debt reduction commitments under the revised data framework.