New GDP series upgrades FY26 growth to 7.6% in second advance estimates
The Indian government has introduced a new GDP series with an updated base year of 2022-23, replacing the 2011-12 base. According to the second advance estimates, India's economic growth is projected at 7.6% for FY26, an upgrade from the 7.4% predicted earlier. While real GDP growth shows a stronger outlook driven by a 12.5% surge in manufacturing, nominal GDP has been revised downward for the 2023-26 period. This revision is expected to negatively impact fiscal metrics like the fiscal deficit-to-GDP and debt-to-GDP ratios. The services sector is also expected to quicken to 8.9% growth in FY26.
Key Points
- The base year for GDP calculation has been updated from 2011-12 to 2022-23 to improve data representativeness.
- FY26 growth is pegged at 7.6%, largely driven by the secondary sector, specifically manufacturing and construction.
- Nominal GDP has been revised downward, which may lead to higher fiscal deficit-to-GDP ratios than previously estimated.
- The primary sector, including agriculture and mining, is expected to see a significant growth slowdown compared to the previous year.
Exam Facts
- New GDP base year: 2022-23.
- FY26 GDP growth estimate: 7.6%.
- Projected manufacturing sector growth for 2025-26: 12.5%.
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