High-frequency indicators point to another phase of strong expansion. BMI’s GDP tracker suggests the economy grew 9.2% year-on-year in Q4 FY2026, driven by policy support that improved consumer sentiment and spending conditions.
Consumption trends were particularly robust. Automobile registrations climbed 18% year-on-year during the quarter, the strongest performance outside the pandemic period, while the value of real-time gross settlement transactions, a proxy for retail activity, rose 16.7%, up from 14.7% previously.
Investment and industrial activity have also benefited from policy stimulus. Industrial production expanded 4.8% year-on-year in the second half of 2025, accelerating from 3.0% in the first half, supported by fiscal measures that increased production-linked incentives for sectors such as automobiles and electronics by more than $760 million, a 77% rise from the previous allocation.
Despite this momentum, BMI retained its 7.4% FY2025-26 growth forecast, noting that the nowcast is based on incomplete December data and that base effects are expected to slow growth in the second half of the fiscal year, creating pockets of near-term moderation.
Forward-looking indicators also signal some cooling. India’s Purchasing Managers’ Index has declined for four consecutive months to 59.5 in January 2026, pointing to moderation even though activity remains in expansion territory.
Still, the strength of the Q4 estimate poses a clear upside risk to the outlook. BMI said that if Q4 growth matches the 9.2% year-on-year nowcast, FY2025-26 expansion could be revised upward by at least 0.6 percentage points, underscoring the underlying resilience of India’s growth trajectory. Taken together, firm consumption, policy-backed investment and still-robust activity indicators suggest India’s macroeconomic momentum remains intact, even as base effects and softening survey data mark the principal “soft patches” in the near-term outlook.