A New Economic Benchmark
India's economic performance in the third quarter of the financial year 2025-26 has been marked by a significant uptick, with Gross Domestic Product (GDP)
expanding by a healthy 7.8% compared to the same period in the previous year. This impressive figure was unveiled alongside updated forecasts and a pivotal shift in how the nation's economic output is measured. The Ministry of Statistics and Programme Implementation has introduced a new series for GDP estimations, establishing 2022-23 as the revised base year, superseding the earlier benchmark of 2011-12. This recalibration is a crucial step, aimed at better reflecting the current economic landscape and structural changes that have occurred over the past decade. By updating the base year, the government ensures that growth calculations are anchored in more contemporary economic realities, providing a more relevant and accurate assessment of progress.
Enhanced Data & Methods
The modernization of India's GDP calculation methodology is multifaceted, focusing on incorporating richer data streams and refining analytical techniques. A cornerstone of this upgrade is the expanded utilization of contemporary data sources, including detailed information from Goods and Services Tax (GST) filings, Public Finance Management System (PFMS) records, and vehicle registration data from e-Vahan. These sources offer a more granular and timely insight into economic activities across various sectors. Furthermore, the statistical approach has seen significant evolution. The introduction of 'double deflation' for key sectors like manufacturing and agriculture, as opposed to the previous widespread reliance on 'single deflation,' allows for a more precise separation of volume and price changes, leading to more accurate real output measurements. The integration of the Supply Use Table (SUT) framework also plays a vital role, helping to reconcile differences between estimates derived from production and expenditure perspectives, thereby enhancing the overall coherence of the national accounts.
Revised Projections and Outlook
With the new GDP series and updated methodologies now in place, the outlook for India's economic expansion has been recalibrated. For the entirety of FY26, real GDP is now projected to grow at a robust 7.6%, an upward revision from the 7.1% estimated for FY25. This translates into a projected real GDP of Rs 322.58 lakh crore in FY26, an increase from Rs 299.89 lakh crore in the preceding financial year. Nominal GDP growth is also anticipated to remain strong, estimated at 8.6% for FY26. On a broader level, real Gross Value Added (GVA), which represents the economic activity generated across all sectors before accounting for taxes and subsidies, is forecasted to expand by 7.7% in FY26, up from 7.3% in FY25. These revised figures underscore a positive trajectory for the Indian economy, supported by enhanced data collection and analytical precision.
Sectoral Performance Insights
Examining the performance across different sectors provides a clearer picture of the economic drivers. In the financial year 2025-26, the primary sector, encompassing agriculture and allied activities, is expected to witness growth of 4.9%. The secondary sector, which includes manufacturing, mining, and construction, is projected to expand at a more vigorous pace of 8.0%. Meanwhile, the services sector, a significant contributor to India's economy, is anticipated to grow by 7.9%. These sectoral growth rates, derived from the updated statistical framework, offer valuable insights into the relative contributions and strengths of different economic activities. The enhanced accuracy of these estimates, facilitated by the new base year and improved methodologies, allows for more informed policy decisions and strategic planning.
