India posts 7.7% GDP growth in FY26, lifted by strong March quarter

India’s economy grew a solid 7.8% in the January-March period of FY26 despite disruptions from the West Asia conflict, easing from an upwardly revised 8% in the previous quarter and taking full-year growth to 7.7%, provisional government data showed on Friday.

Despite the quarterly moderation, the annual figure came in slightly above market expectations for a 7.6% expansion, buoyed by a stronger-than-anticipated January-March performance. The economy had grown 7.1% in 2024-25.

"Real GDP (gross domestic product) has been estimated to grow by 7.7% in FY 2025-26," the ministry of statistics & programme implementation (MoSPI) said in a statement, adding that nominal GDP, which factors in inflation, grew 8.9% during the year.

The January-March (Q4FY26) expansion was also above the 7% growth recorded in the year-ago quarter.

“The Q4 performance was good for the economy with a high growth of 7.8%. This does indicate that the war effect was muted as well as the corporate performance was good. Agriculture was propped up to 3.6% due to the rabi harvest,” said Madan Sabnavis, chief economist, Bank of Baroda.

India's real GDP was estimated to grow at 7.6% during 2025-26, as per the second advance estimates under the new GDP series (base year 2022-23).

The gross value added (GVA), seen as a more accurate measure of underlying economic activity, grew 7.9% in the first three months of 2026, compared to a revised expansion of 8% in the previous quarter. GVA strips out indirect taxes and government subsidy payouts, which tend to be volatile.

India's GDP grew 7.1% in 2024-25, 9.2% in 2023-24, 7.2% in 2022-23 and 8.7% in 2021-22, maintaining its position as the world's fastest-growing major economy.

India’s chief economic adviser (CEA) V. Anantha Nageswaran said the evolving West Asia crisis represents a significant supply shock and could also trigger a demand shock, which may be either positive or negative.

“We have to wait and see because we are seeing extraordinary resilience in the high-frequency data, which we should not dismiss out of hand,” Nageswaran said at a press conference in New Delhi to brief on the Q4 and full-year GDP figures for FY26.

He said that most high-frequency indicators suggest that domestic demand and overall economic activity have remained relatively resilient, but there could be emerging signs of stress. “We have to wait and see how the oil prices evolve, and there is also a monsoon-related uncertainty, which we have to keep in mind, not only in terms of inflation, and also in terms of what it means for disposable income and private final consumption expenditure going forward. So, there are multiple things to look for both on the upside and on the downside," Nageswaran said.

He expressed confidence that even if growth slips below 7% in FY27, as forecast by the Reserve Bank of India (RBI), macroeconomic stability measures and supply-side assurances will help the economy return to a 7%-plus growth path in FY28 or sooner if external conditions improve.

The RBI’s monetary policy committee on Friday lowered India’s FY27 growth forecast to 6.6% from 6.9%, citing risks from a sub-normal monsoon and uncertainty over the West Asia conflict.

Nageswaran said that government would not provide guidance on growth and inflation numbers for FY27 at this juncture but would go with RBI’s projections of growth of 6.6% with downside risks and 5.1% inflation with an upside risk.

“Assuming an average crude oil price of $95/barrel, ICRA pegs the GDP growth to slow down to sub-6.5% in FY2027 from 7.7% in FY2026, with the West Asia crisis expected to transmit to lower growth outcomes, particularly in H1 FY2027. However, nominal GDP expansion is set to improve to above 12% in FY2027 from 8.9% in FY2026, on the back of unpalatably higher inflation,” said Aditi Nayar, chief economist, Icra Ltd.