India’s economy recorded GDP growth of 7.7% in fiscal year 2025-26, according to government data, compared with 7.1% in the previous fiscal year.
Despite rising global uncertainties, geopolitical conflicts and inflationary pressures, the economy maintained its growth momentum during the year. Gross Domestic Product expanded by 7.8% in the January-March quarter, reflecting continued economic activity.
Government data showed that GDP growth in the fourth quarter of fiscal year 2025-26 stood at 7.8%, exceeding market estimates. The third-quarter growth rate was revised upward to 8%.
After adjusting for inflation, India’s total GDP increased to Rs 323.12 lakh crore from Rs 299.89 lakh crore in the previous fiscal year.
The Government of India has implemented 2022-23 as the new base year for the calculation of economic data. The revision aims to better capture changes in consumer behavior following the COVID-19 pandemic, the expansion of the digital economy and emerging economic activities. Economists said the new GDP series is expected to provide a more accurate and contemporary assessment of economic activity.
Government data indicated that domestic demand, investment and the services sector continued to support economic growth during the fiscal year.
Economists, however, noted that global economic pressures, geopolitical tensions and inflation remain potential challenges for future growth.
Ongoing geopolitical tensions in the Middle East and other regions continue to affect global energy markets. As India imports a significant portion of its crude oil requirements, any increase in oil prices could contribute to inflation and raise costs for households and industries.
Meteorologists have indicated the possibility of El Niño conditions this year, which could weaken the monsoon. Lower-than-normal rainfall may affect agricultural output, potentially increasing food inflation and impacting rural demand, farm incomes and agriculture-linked industries.
Global economic slowdown, trade restrictions and supply-chain disruptions could also affect India’s export sector, with potential implications for industrial production and employment.
Taking global conditions into account, the Reserve Bank of India (RBI) has reduced its GDP growth forecast for fiscal year 2026-27 to 6.6% from 6.9%. The central bank said factors including geopolitical conflicts, volatility in energy prices and a slowdown in the global economy could exert pressure on India’s growth rate in the coming period.
