GDP to grow at 7.4% in 2025-26, government predicts in first advance estimates for the year

The government has estimated that real growth in the Gross Domestic Product (GDP) of the country will stand at 7.4% in the current financial year 2025-26, up from the 6.5% seen in the previous year.

In the First Advance Estimates of GDP for 2025-26, released by the Ministry of Statistics and Programme Implementation on Wednesday (January 7, 2026), the government has predicted that nominal growth for the year would be 8%. 

Also Read: Is India’s 8.2% growth rate sustainable?

The First Advance Estimates and the Second Advance Estimates, which will be released on February 27, are estimates of the full year’s growth based on data available up to that point. The Provisional Estimates for 2025-26, based on the full-year’s data, will be released on May 30, 2026.

Based on the Centre’s assessment that the full year’s growth would be 7.4%, and the fact that Q1 and Q2 saw 7.8% and 8.2% growth, respectively, this means the second half of the year would see average growth slow to 6.8%. 

The Reserve Bank of India had in December 2025 predicted that GDP growth in 2025-26 would be 7.3%, with Q3 at 7.0 %, and Q4 at 6.5%. 

The Centre predicts that the manufacturing sector would see growth accelerating to 7% in 2025-26 from 4.5% in 2024-25. The agriculture sector, on the other hand, is predicted to see growth slowing to 3.1% in 2025-26 from 4.6% in the previous year. 

The mining and quarrying sector is estimated to contract in 2025-26, by 0.7%, as compared to a growth of 2.7% in the previous year. 

Higher GDP growth: need for cautious optimism

The tertiary sector, which comprises the services sectors, is expected to see growth quicken to 9.1% in 2025-26 from 7.2% in 2024-25. Within this, the ‘financial, real estate and profession services’, and the ‘public administration, defence, and other services’ sub-groupings are both expected to grow at 9.9% in 2025-26.

The ‘trade, hotels, transport and communication’ category is expected to grow at a relatively slower 7.5% in 2025-26, although this is faster than the 6.1% seen in 2024-25. 

Notably, the government expects Private Final Consumption Expenditure — a metric that captures consumer spending — to grow at 7% in 2025-26, marginally slower than the 7.2% recorded in the previous year.

Gross Fixed Capital Formation, on the other hand, is expected to grow at 7.8% in 2025-26, faster than the 7.1% seen in 2024-25.