India's Economy Grows 7.7% In FY26, Beats Estimates; Here's What Drove The Growth
India’s economy grew by 7.7% in FY26, exceeding the government’s estimate of 7.6% and outpacing the 7.1% growth in FY25, driven by strong consumer spending, private investment, and services sector expansion. The Statistics Ministry reported the data on June 5, though quarterly growth slowed slightly in Q4 to 7.8%, primarily due to weaker manufacturing activity.
India’s economy expanded by 7.7% in the financial year 2025-26 (FY26), surpassing the government’s earlier projection of 7.6% and marking an improvement over the 7.1% growth recorded in FY25. The Statistics Ministry released the figures on June 5, highlighting the resilience of the economy amid global uncertainties. The growth was primarily fueled by private consumption, which rose by 7.7% compared to 5.8% in FY25, alongside a surge in private investment to 8.2% from 6.2% in the previous year. Strong performance in the services sector, including banking, transport, hospitality, trade, and tourism, further supported economic expansion. While annual growth remained robust, the economy slowed slightly in the January-March quarter (Q4), expanding by 7.8% compared to 8% in Q3. Manufacturing growth weakened to 7.3% in Q4 from 12.8% in Q3, contributing to the quarterly slowdown. Sector-wise, services led growth with a 9.3% increase, while trade, transport, and hospitality grew by 11%. Banking sector activity also strengthened, with Gross Value Added (GVA) rising by 10.4% due to higher credit demand and deposits. Manufacturing maintained a healthy annual growth rate of 10.7%, despite the Q4 decline, while agriculture growth slowed to 3% from 4.2% in FY25. Overall, Gross Value Added (GVA) growth for FY26 stood at 7.9%, reflecting broad-based economic expansion across key sectors.
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