New Delhi: India’s economy expanded more strongly than anticipated in the third quarter of the financial year 2025–26, defying concerns over disruptions linked to tariffs imposed by US President Donald Trump. According to data released by the Ministry of Statistics and Programme Implementation, the country’s Gross Domestic Product (GDP) grew by 7.8 per cent in real terms during the October–December quarter. This exceeded the 7.2 per cent growth projected by many economists.
In comparison, GDP growth stood at 8.4 per cent in the second quarter of the current financial year, while the economy had recorded a 7.4 per cent expansion in the corresponding quarter of the previous year. With the latest figures, the government has revised its full-year growth estimate for FY26 to 7.6 per cent, higher than the earlier projection of 7.4 per cent. For FY25, real GDP growth was recorded at 7.1 per cent. In nominal terms, GDP grew by 8.9 per cent year-on-year in the third quarter of FY26. For the entire financial year, nominal GDP growth is estimated at 8.6 per cent.
In value terms, real GDP is projected to reach Rs 322.58 lakh crore in FY26, up from Rs 299.89 lakh crore in FY25. Real Gross Value Added (GVA), which measures economic activity across various sectors, is estimated to grow by 7.7 per cent in FY26 compared to 7.3 per cent in the previous financial year.
The data was released as part of the Second Advance Estimates for FY 2025–26 and reflects a significant statistical revision, with the government introducing a new GDP series based on a more recent base year.
Shift to a new base year
A key feature of the latest data is the introduction of a new GDP series with 2022–23 as the base year, replacing the earlier 2011–12 base. The base year serves as the benchmark for calculating growth at constant prices, enabling economists to measure real economic expansion after adjusting for inflation.
Such revisions are undertaken periodically to better reflect structural changes in the economy and to enhance the reliability of national accounts. According to the official release, the shift to the new base year aims to incorporate updated data sources, refine estimation methods, expand coverage and improve the overall accuracy of economic measurement. The revision does not alter the real size of the economy. Instead, it updates the statistical framework so that growth, sectoral trends, consumption patterns and investment activity are measured in line with the present structure of the economy.
Expanded data sources and methodological changes
One of the major improvements in the new series is the broader use of detailed and timely data. The revised framework incorporates Goods and Services Tax (GST) data, information from the Public Finance Management System (PFMS), and e-Vahan vehicle registration records. These sources provide more granular insights into economic activity across sectors.
The estimation methodology has also undergone changes. The government has introduced double deflation for the manufacturing and agriculture sectors. Under this approach, both input and output prices are adjusted separately to obtain a more precise estimate of real value addition. For most other sectors, a single extrapolation is applied. Previously, single deflation was widely used across sectors. In addition, there is greater reliance on annual surveys to better capture economic activity in the household and informal sectors. These include the Annual Survey of Unincorporated Sector Enterprises and the Periodic Labour Force Survey. By drawing on these surveys, the government seeks to strengthen the measurement of segments of the economy that are often harder to quantify. Another important change is the integration of the Supply Use Table framework with the national accounts system. This step is intended to reduce discrepancies between production-based and expenditure-based GDP estimates, thereby improving internal consistency.
Revised historical data and sectoral performance
The adoption of the new base year has led to revised growth figures for earlier years as well. Under the updated series, real GDP growth was 7.2 per cent in FY24 and 7.1 per cent in FY25. Nominal GDP growth for FY25 stood at 9.7 per cent. Sector-wise data for FY25 shows that the primary sector expanded by 4.9 per cent. The secondary sector recorded growth of 8.0 per cent, while the services sector grew by 7.9 per cent. Looking ahead, the provisional estimates for FY26, along with GDP data for the fourth quarter, are scheduled to be released on May 29, 2026, in accordance with the advance release calendar.
