India’s GDP growth projected at 7.4 per cent in FY 2025-26, driven by strong services sector

India’s GDP growth surged to 8.2 per cent in the second quarter (July-Sept) of FY 2025-26. Representational Pic/File

India's real Gross Domestic Product (GDP) growth is projected at 7.4 per cent in the financial year 2025-26, up from 6.5 per cent in FY 2024-25, according to the advanced estimates released by the Ministry of Statistics on Wednesday, reported the IANS.

The data points to a broad-based recovery, led mainly by strong performance in the services sector.

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Services sector leads growth

The services sector remains the biggest driver of economic expansion. Growth in financial services, real estate, professional services and public administration is estimated at a robust 9.9 per cent at constant prices in FY 2025-26, according to the IANS.

Meanwhile, trade, hotels, transport, communication and broadcasting-related services are expected to grow by 7.5 per cent, the official statement said.

Manufacturing, construction and agriculture performance

The secondary sector, which includes manufacturing and construction, is projected to grow by 7 per cent during FY 2025-26.

The agriculture and allied sector is estimated to grow at 3.1 per cent, reflecting stable rural activity despite challenges such as weather variability.

Consumption and investment show strong growth

Private Final Consumption Expenditure (PFCE), a key indicator of household spending, is estimated to grow by 7 per cent in FY 2025-26. This growth is supported by income tax exemptions announced in the Union Budget 2025-26 and subsequent GST rate cuts across various goods and services.

Gross Fixed Capital Formation (GFCF), which reflects investment activity, is expected to grow by 7.8 per cent, compared to 7.1 per cent in the previous financial year, the news agency reported.

Strong Momentum in Second Quarter

India's GDP growth surged to 8.2 per cent in the second quarter (July-September) of FY 2025-26, up sharply from 5.6 per cent in the same period last year.

Growth in the secondary sector stood at 8.1 per cent, while the tertiary sector expanded by 9.2 per cent, pushing overall GDP growth above the 8 per cent mark for the quarter.

Sector-wise Q2 Performance

During the second quarter--

- Manufacturing grew by 9.1 per cent

- Construction expanded by 7.2 per cent

- Financial, real estate and professional services recorded a strong 10.2 per cent growth

- Agriculture and allied activities grew by 3.5 per cent

- Electricity, gas, water supply and utilities posted a growth of 4.4 per cent

Consumption boost reflects rising incomes

Real PFCE increased by 7.9 per cent in Q2 of FY 2025-26, compared to 6.4 per cent in the corresponding quarter last year. Officials said this reflects higher incomes and improved employment conditions across sectors.

First-half growth remains robust

Following a 7.8 per cent growth in the first quarter, India's GDP growth for the first half (April-September) of FY 2025-26 stands at an impressive 8 per cent, compared to 6.1 per cent in the same period of the previous year.

Fastest-growing major economy

Despite global challenges, including US tariff hikes and trade disruptions, India continues to remain the world's fastest-growing major economy.

The International Monetary Fund (IMF) has projected India to be the only major economy expected to grow above 6 per cent in FY 2025-26, even as global growth slows.

(with IANS inputs)