Overview of Indian Economic Growth Projections
The Indian economy is projected to expand at a 7.4 per cent growth rate in the fiscal year 2025-26, according to the National Statistics Office's first advance estimates. This prediction surpasses earlier expectations from analysts and the Reserve Bank of India (RBI).
Economic Performance in the First Half of the Year
- The economy achieved an 8 per cent growth rate in the first half of the year.
- The growth momentum is anticipated to decline to 6.8 per cent in the second half.
- Factors contributing to this slowdown include reduced government spending and the effects of US tariffs on merchandise exports.
Sector-wise Performance
- The services sector is expected to experience significant growth, increasing from 7.2 per cent in 2024-25 to 9.1 per cent in 2025-26.
- Key segments such as trade, hotels, transport and communication, financial services, real estate, and public administration are contributing to this growth.
- In the industrial segment, manufacturing is showing improvement while construction and utilities experience slower growth.
Concerns and Implications
- The nominal GDP growth rate is projected at 8 per cent, which is below the 10.1 per cent assumption in the Union budget.
- This marks the second consecutive year with nominal growth below 10 per cent, potentially affecting government debt/deficit dynamics.
Future Data Revisions
The GDP estimate is based on data available up to November. Revised GDP estimates with a base year of 2022-23 will be released, incorporating new methodologies and data sources.
- A new Consumer Price Index (CPI) series with 2024 as the base year will be released in February.
- A new series for the index of industrial production is also expected.
