India records 7.7% GDP growth in FY26; Q4 growth comes in at 7.8% - Moneycontrol.com
The decline in quarter-on-quarter growth in Q4 was due to a sharp decline in manufacturing growth – which fell from 7.3 percent in Q4 from
The decline in quarter-on-quarter growth in Q4 was due to a sharp decline in manufacturing growth – which fell from 7.3 percent in Q4 from 12.8 percent in Q3. Real GDP expanded by 7.7%, while nominal GDP grew by 8.9%. The Indian economy grew 7.7 percent in FY26, up from 7.6 percent projected in the second advance estimates, official data released by statistics ministry showed on June 5. In FY25, the real GDP growth was 7.1%. In Q4, the GDP grew 7.8 percent, down from 8 percent in Q3FY26. The decline in quarter-on-quarter growth was due to a sharp decline in manufacturing growth – which fell from 7.3 percent in Q4 from 12.8 percent in Q3. Growth is FY27 is expected to lower by 110 basis points to 6.6 percent – as projected by the Reserve Bank of India (RBI). The gross value added (GVA) growth was 7.9 during FY26. In Q4 too the growth was the same. The full year’s GDP (of FY26) was released with the new base year 2022-23. The nominal GDP in FY26 grew by 8.9 percent, down from 9.7 percent in FY25.
On the expenditure side, private final consumption expenditure (PFCE) growth came in at 7.7 in FY26, up from 5.8 percent in FY25. And gross fixed capital formation’s (GFCF) growth soared to 8.2 percent in FY26 from 6.2 percent in FY25. On the GVA side – manufacturing sector grew by 10.7 percent in FY26 from 9.3 in FY25. The agriculture sector growth eased to 3 percent in FY26 from 4.2 percent in FY25. Services sector growth in FY26 stood at 9.3 percent in FY26, up from 7.9 percent in FY25. The trade, transport, hospitality group registered higher growth of 11% (in FY26) reflecting the trend of higher mobility in the economy and higher travel and tourism activity, said Madan Sabnavis, Chief Economist, Bank of Baroda told Moneycontrol. The financial sector too witnessed higher growth which can be attributed to higher growth emanating from the banking sector where both deposits and credit grew at impressive rates by the end of the year, said Sabnavis. Banking sector’s GVA grew 10.4 percent in FY26 from 10 percent in FY25. "These two sub-sectors themselves took growth beyond expectations," Radhika Piplani, Chief Economist, Motilal Oswal Financial Services said.
On private sector capex, the economists said that FY26 recorded strong investments from private players. "In my conversation with the private sector, they were bullish on expanding their capacities...the GST cuts in mid FY26, and repo rate cuts pushed up capex," Piplani told Moneycontrol. Watch the full discussion on FY26 GDP numbers here. Outlook for FY27 Piplani noted that the sentiment for capex by private sector has changed drastically for FY27, primarily due to the ongoing war in West Asia. "And that’s why the capex from private sector will be lesser in FY27." The RBI has projected GDP growth at 6.6 percent in FY27, and retail inflation at 5.1 percent. India Ratings and Research expected FY27 growth at 6.7 percent, and Crisil sees it at 6.6 percent. Aditi Nayar, Chief Economist, at Icra said export-oriented sectors are likely to record lesser capex in this fiscal as compared to FY26. "The capex trajectory in FY27 would be sector specific…construction activity may see a rise in the wake of El Nino," Nayar said. On the RBI’s policy decision earlier today, economists noted that risks to growth and inflation have been properly highlighted in today’s policy.
The repo rate remained unchanged at 5.25 percent. Sabnavis noted that real and nominal GDP growth figures will see a higher divergence in FY27 – because the latter will be double digits owing to inflation. "Inflation will hit consumption, especially in rural areas." The current macro-indicators, include rupee depreciation and crude oil prices, may have a modest impact on fiscal deficit this year, but the Current Account Deficit may widen to around 2 percent in FY27 (from less than 1 percent in FY26), said Nayar. Piplani said that growth in FY27 will be driven by banking sector, as well as power demand. On the taxation measures announced today – related to FPIs – as well as the steps taken to relax norms on overseas borrowing by public sector firms and foreign currency deposit mobilisation by banks, the economists see an additional capital inflow of $30-50 billion in FY27. They also expect the pace of rupee depreciation to ease, provided there are no major shocks on the oil front.
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