Govt. pegs real GDP growth at 7.4% amid concerns over tariffs
ECONOMY – INDICATORS
8 JANUARY 2026
- The Union government has estimated that real growth in the Gross Domestic Product (GDP) of the country will stand at 7.4% in the current financial year 2025-26, up from 6.5% recorded the previous year.
- In the First Advance Estimates (FAE) of GDP for 2025-26, released by the Ministry of Statistics and Programme Implementation, the government said that nominal growth for the year would be 8%.
- India’s current base year for real GDP is 2011-12, but the government is in the process of revising it to 2022-23, with the new data series expected to be released in February 2026 to better reflect structural changes in the economy.
- The FAE for any year is important as it forms the basis for various calculations and ratios used in preparing the Union Budget.
- The First Advance Estimates, and the Second Advance Estimates, which will be released on February 27, are forecasts of the full year’s growth based on data available up to that point.
- The Provisional Estimates for 2025-26, based on the full-year’s data, will be released on May 30.
- Based on the Centre’s assessment that the full year’s growth would be 7.4%, and the fact that Q1 and Q2 saw 7.8% and 8.2% growth respectively, the second half of the year would see average growth slow to 6.8%.
- The 50% tariff levied by the U.S. on imports from India has hit several labour-intensive sectors such as apparel, textiles, and engineering goods.
- The government has tried to boost consumer demand through both direct tax and indirect tax rate cuts.
