India's GDP Growth Pegged at 7.4% for FY26, Services Sector Leads Surge

The buoyant growth in the services sector has been found to be a major driver with a robust growth of 9.9 per cent at constant prices in FY 2025-26 for financial services, real estate, professional services, and public administration.

Trade, hotels, transport, and communication & services related to the broadcasting sector have been estimated to grow by 7.5 per cent, the official statement said.

Manufacturing and construction in the secondary sector have been estimated to achieve a growth rate of 7 per cent, while the agriculture sector growth rate is estimated at 3.1 per cent.

Real Private Final Consumption Expenditure (PFCE) has been estimated to attain a growth rate of 7 per cent during FY 2025-26, backed by the income tax exemptions announced in the Budget for 20205-26 and subsequent GST rate cuts across goods and services.

Gross Fixed Capital Formation (GFCF) has been estimated to have a 7.8 per cent growth rate at Constant Prices during FY 2025-26, compared to a 7.1 per cent growth rate in the previous FY.

India's GDP growth had accelerated to a robust 8.2 per cent in the second quarter (July-September) of the current financial year compared to the corresponding figure of 5.6 per cent during the same quarter of FY 2024-25, according to figures released in November.

The secondary and tertiary sectors, with growth rates of 8.1 per cent and 9.2 per cent respectively, have boosted the real GDP growth rate in Q2 of FY 2025-26 to rise above 8 per cent, an official statement said.

The manufacturing sector clocked a strong growth rate of 9.1 per cent, while the construction segment grew at 7.2 per cent in the secondary sector during the quarter.

The growth rate of the financial, real estate and professional services in the tertiary sector jumped by a double-digit 10.2 per cent in Q2 of FY 2025-26.

The agriculture and allied sector posted a 3.5 per cent growth, while the electricity, gas, water supply, and other utility services sector grew by 4.4 per cent during the second quarter.

Real PFCE shot up by 7.9 per cent during Q2 of FY 2025-26 as compared to the 6.4 per cent growth rate in the corresponding period of the previous financial year, reflecting the higher incomes and employment being generated in the economy.

The acceleration in the growth rate in the second quarter comes on the back of a high growth rate of 7.8 per cent in the first quarter (April-June) of the current financial year.

The real GDP growth rate now works out to an impressive 8 per cent for the first half H1 (April-September) of FY 2025-26, as compared to the growth rate of 6.1 per cent in H1 of FY 2024-25, the figures showed.

The figures show that India continues to be the world's fastest-growing major economy despite global headwinds such as the US tariff hikes.

The IMF has forecast India to be the only economy that is expected to clock an over 6 per cent growth rate in 2025-26 as the US tariff turmoil is expected to disrupt world trade and slow down the growth of the global economy.

- IANS