India’s economy may grow faster than previously estimated this financial year as the government unveils a new framework for calculating output, highlighting the resilience of the world’s most populous nation to global trade disruptions.
On Friday, the government will shift the GDP base year to 2022-23 from 2011-12 and publish advance estimates for the financial year ending 31 March 2026. The updated projections may peg India’s GDP growth rate at 7.6% in FY26, according to the median estimate of 14 economists surveyed by Bloomberg. That compares with the government’s first advance GDP estimate of 7.4% in January under the previous series.
The GDP overhaul is part of a broader effort to update India’s economic data. Earlier this month, the government revised its inflation series to better capture shifting spending patterns in the world’s fastest-growing major economy. Rebasing growth adjusts the weights assigned to sectors to reflect how the economy has evolved over the past decade. Fast-growing areas such as the digital economy and gig work are likely to gain prominence in the new series, while sectors including agriculture and informal manufacturing may carry less weight.
“The new GDP series will be critical in determining the future course of policy actions,” said Teresa John, economist with Nirmal Bang Securities. While space exists for the Reserve Bank of India to remain growth-supportive, “a lot will depend on policy inferences drawn from the new GDP series”.
Economists will also look to the new calculation methodology for indications of when India might surpass Japan as the world’s fourth-largest economy. Japan’s economy is about $4.4 trillion, and India has yet to overtake it largely because of the rupee’s sharp depreciation against the dollar last year, though the revised series could significantly lift GDP.
A similar revision in 2015 boosted India’s GDP by about $120 billion and lifted the estimated growth rate for 2013-14 to 6.9% from 4.7%.
India’s government has remained optimistic about growth outlook for the current and next financial year, despite trade tensions with the US for much of last year. The two countries agreed to a trade deal earlier this month, and senior officials have said it could lift growth estimates further. However, the outlook for those trade terms is now uncertain after the Supreme Court ruled against the Trump administration’s tariffs.
To shield the economy from trade disruptions, the government last year rolled out sweeping reforms, including an overhaul of consumption taxes. Friday’s data will also provide the first full-quarter snapshot since those tax cuts, covering the October-to-December period.
According to the median of 34 economists in a Bloomberg survey, the October-to-December quarter may show growth of 7.6% under the new base year.
Radhika Piplani, an economist at Motilal Oswal Financial Services Ltd., expects the numbers to “positively surprise consensus growth expectations.” She expects expansion in the quarter to come in as high as 8.5%, compared with 8.2% reported in the July-to-September period.