Robust Q3 Growth Achieved
India's economy demonstrated significant vitality in the third quarter of the fiscal year 2025-26, culminating in a Gross Domestic Product (GDP) expansion
of 7.8% for the period ending December 31, 2025. This figure aligns with or surpasses many analyst expectations, signaling a healthy economic trajectory. The National Statistical Office reported that the real GDP, measured at constant prices, reached ₹84.54 lakh crore, a notable increase from ₹78.41 lakh crore recorded in the same quarter of the previous fiscal year (Q3 FY25). This growth underscores a sustained period of economic expansion. Furthermore, the overall economic growth for the entire fiscal year 2025-26 has been revised upwards to 7.6% based on the second advance estimates, an improvement from the initial projection of 7.4%. This revised figure indicates a stronger performance than the 7.1% growth observed in the preceding fiscal year (FY25), painting a picture of accelerating economic activity.
New Base Year Impact
A key development accompanying the latest GDP data is the revision of the base year for calculation from 2011-12 to 2022-23. This recalibration is crucial for accurately reflecting the contemporary structure and dynamics of India's economy, which has undergone substantial transformations since the previous base year. The updated series incorporates more granular and recent data sources, including Goods and Services Tax (GST) records, e-Vahan vehicle registration data, and natural gas consumption figures. Methodological enhancements are also expected to improve the measurement of the informal economy through quarterly bulletins and better capture the expanding influence of digital commerce and services in the nation's overall output. This shift to a more current base year provides a more precise lens through which to view economic performance and trends, ensuring that national accounts are in step with the evolving economic landscape.
Sectoral Performance Highlights
The recent GDP figures reveal a dynamic performance across various economic sectors. Notably, the manufacturing sector exhibited a remarkable growth rate of 13.3% in Q3 FY26, demonstrating a strong rebound and expansion. The services sector also continued its robust momentum, with services GVA (Gross Value Added) growth accelerating to a seven-quarter high of 9.5% in Q3 FY26, up from 9.3% in the previous quarter. Within the tertiary sector, financial, real estate, and professional services recorded substantial growth of 11.2%. The trade, hotels, transport, communication, and services related to broadcasting also experienced double-digit growth, reaching 11%. While the agriculture sector saw a more moderate growth of 1.4%, the secondary sector as a whole contributed significantly with a 10.1% growth rate. However, the electricity, gas, and water supply sector witnessed a moderated real growth rate of 1.5% during the same quarter.
Expenditure and Investment Trends
Analyzing the expenditure side of the economy in Q3 FY26 highlights key shifts in consumption and investment patterns. Real Private Final Consumption Expenditure (PFCE) showed a strong increase, registering an 8.7% growth rate compared to 6.0% in the corresponding period of the previous fiscal year. This indicates a healthy rise in consumer spending. Conversely, Government Final Consumption Expenditure (GFCE) saw a deceleration, with a growth rate of 4.7% in Q3 FY26, down from 7.6% in Q3 FY25. On the investment front, Gross Fixed Capital Formation (GFCF) exhibited positive momentum, recording a 7.8% growth rate at constant prices. This signifies an increase in fixed capital investment, which is vital for long-term economic development and productivity enhancement.
