There is good news on the economic front. India’s economy is expected to grow 7.4% in the current fiscal year on the back of strong manufacturing and services growth, strong household spending and increased investment in fixed assets, according to official data released on Wednesday, January 7. According to the first advance estimates of the National Statistical Office (NSO), India’s GDP growth for FY 2025-26 is estimated at 7.4%, much higher than the 6.5% recorded last year. The services sector is expected to be the largest contributor to this strong recovery, potentially growing at 9.9%. Manufacturing and construction is also expected to grow by 7%. The Reserve Bank of India (RBI) has also projected a growth rate of 7.3% due to pick up in rural demand and investment.
India’s position strengthened in Asia
NSO data shows that India’s economy remains resilient even amid global uncertainties. Industrial production, better credit flows and market reforms are helping the country maintain its momentum. Despite increasing external pressures, India has become one of the fastest growing major economies of Asia. During the fiscal year, the government provided income tax relief to the middle class and reduced GST rates from September 22, 2025, leading to lower prices of goods.
ahead of RBI estimates
The Reserve Bank of India (RBI) last month estimated that India’s GDP is expected to grow by 7.3% in real terms this year due to strong industrial growth, good agricultural output, strong rural demand and better urban consumption. RBI had estimated growth at 7% in the December quarter and 6.5% in the March quarter.
Better performance than Asian Development Bank
The Asian Development Bank (ADB) also last month raised India’s growth forecast for FY26 to 7.2% from 6.5% estimated in September. This was attributed to strong domestic consumption and strong export performance.
fourth largest economy
India has recently overtaken Japan to become the world’s fourth largest economy in terms of nominal GDP. In the coming years, this economy is projected to overtake Germany to become the third largest economy after the United States and China. Government officials have expressed hope that India will leave Germany behind in the next three years.
