India’s gross domestic product (GDP) growth slowed to 7.8% in the third quarter of fiscal year 2026, falling behind preceding quarter’s 8.4% rise. However, it exceeded ET poll estimates of 7.4% amid a reset of base year to 2022-23.
The FY26 projections, meanwhile, have been revised to 7.6% from 7.1% in the year earlier.
India has revised its GDP series with 2022–23 as the new base year, replacing 2011–12, with the updated data and back-series. According to the ET poll, expectations for the quarterly GDP ranged from 7% to 8.7%, and the latest print suggests activity held up better than anticipated.
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The GDP had expanded 7.4% in the year-ago quarter, while growth stood at 8.4% in the preceding quarter, according to revised estimates by the Ministry of Statistics, indicating a moderation on a sequential basis but an improvement from last year’s pace.
In the second advance estimates, the government pegged GDP growth for 2025–26 at 7.6%, higher than the first advance estimate of 7.4%. The ET Poll and the Reserve Bank of India both forecast the growth at 7.4%, while economic surveys pegged expansion at around 7%. The economy grew 7.2% in 2023–24 before slowing to 7.1% in 2024–25, pointing to moderation last year ahead of a projected pickup this fiscal, according to new revisions. Economists say:
“The Q3FY27 GDP growth estimate at 7.8% , came a tad below our estimate of 8%. The base revision and the new GDP series suggests that there is an upside bias to manufacturing growth vs old series but overall there is not a significant diversion between the two. We continue to see FY27 growth at 7.1-7.2%,” said Garima Kapoor, Deputy Head of Research and Economist at Elara Capital.
While, Radhika Rao, Senior Economist at DBS Bank, Singapore told Reuters that “At first glance, the momentum in the rebased growth numbers appears to be marginally stronger than the previous trend, with methodological changes expected to have captured updated production structures, wider coverage of segments, new ratios, and improved government data sets, including those that capture activity in the informal sector.”
“Service sector performance signals a strong lift, besides double-digit growth in manufacturing. The October-December quarter also benefited from indirect tax rationalisation and festive demand, in addition to a better faring rural farm sector. The rebased numbers are close to our forecast of 7.7% YoY for FY26,” Rao of DBS Bank added.
For the year, economists expect domestic demand and continued momentum in services to underpin growth, with manufacturing also providing support despite lingering tariff pressures and broader geopolitical tensions. An EY report said India’s expanding network of bilateral trade agreements with major economies has strengthened its growth trajectory and improved its medium-term outlook.
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The overhaul aims to better reflect structural changes in the economy, including post-pandemic consumption shifts and the rise of digital services, while improving the measurement of manufacturing, services and the informal sector using newer datasets and GST data.
The revision introduces methodological changes such as “double deflation” to more accurately measure real value added and a new method to align quarterly and annual estimates. Officials said the update, undertaken with more reliable data now available, is part of efforts to make GDP statistics more accurate and will be carried out roughly every five years.
Sectoral data:
The manufacturing sector has emerged as the key driver of the economy’s resilient performance over three consecutive financial years following the rebasing of national accounts, the MoSPI statement said. The sector recorded double-digit growth in FY2023-24 and FY2025-26, underscoring sustained industrial momentum.
The broader secondary and tertiary sectors also supported economic expansion, each registering growth of over 9% in FY2025-26. Within services, the ‘Trade, Repair, Hotels, Transport, Communication & Services related to Broadcasting and Storage’ segment posted a robust 10.1% growth at constant prices during the year.
On the demand side, consumption and investment remained strong. Private Final Consumption Expenditure (PFCE) and Gross Fixed Capital Formation (GFCF) both recorded growth of more than 7% in FY2025-26, indicating steady household demand and continued capital formation.
Key improvements:
The new GDP series with base year 2022-23 incorporates several methodological improvements aimed at enhancing accuracy and sectoral representation. One key reform is the segregation of activities in multi-activity enterprises, which improves the compilation of estimates for the private corporate institutional sector by assigning output more precisely across sectors.
Coverage of the unincorporated sector has also been strengthened through the use of annual survey data, allowing for a more dynamic and regular capture of economic activity. This marks a shift from reliance on benchmark indicators to more frequent data inputs.
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In terms of estimation methodology, the series adopts double deflation for the agriculture and manufacturing sectors, improving the measurement of real value added by separately deflating output and input values. For the remaining sectors, volume or single extrapolation methods are used, depending on data availability and sectoral characteristics.
The quarterly national accounts series has also been refined through the adoption of the Proportional Denton Benchmarking method, replacing the earlier pro-rata approach. This ensures better temporal distribution of annual estimates across quarters and improves consistency between annual and quarterly data.
Additionally, the series incorporates updated rates and ratios drawn from recent surveys and methodological studies conducted by the Ministry of Statistics and Programme Implementation in collaboration with expert institutions, further strengthening the robustness of national income estimates.