Prime Minister Narendra Modi on Friday, 5 June credited India's 7.7 per cent GDP growth in FY 2025-26 to structural reforms, large-scale infrastructure investment, and the collective effort of 140 crore Indians. The figure cements India's position as the world's fastest-growing major economy amid a broad global slowdown.

What the Numbers Show

India's GDP expanded at 7.7 per cent for the full fiscal year, with the fourth quarter of FY 2025-26 clocking an even sharper 7.8 per cent. Both private final consumption expenditure and gross fixed capital formation grew at more than 7.5 per cent during the year, signalling that demand and investment are expanding in tandem — not just one propping up the other.

The secondary sector — covering manufacturing and industry — recorded 8.8 per cent growth, while the tertiary sector, which includes services, surged 9.9 per cent. The primary sector posted a more modest 3.2 per cent, led by agriculture and fisheries. Notably, manufacturing, trade, hotels, transport, communications, financial services, and real estate all achieved double-digit growth in FY26, according to the official statement.

How India Compares Globally

Modi drew a pointed contrast with other major economies. Germany grew at just 0.4 per cent, Japan at 0.8 per cent, the Euro Area at 1.3 per cent, and the G7 as a bloc at 1.6 per cent. China's growth, meanwhile, has reportedly been weighed down by weak domestic demand, manufacturing overcapacity, and rising youth unemployment.

The International Monetary Fund (IMF) had projected India as the only major economy expected to exceed 6 per cent growth in FY26 — a forecast made against the backdrop of US tariff disruptions and elevated geopolitical uncertainty that dampened global trade.

The Infrastructure Dividend

The government pointed to its sustained capital expenditure push — spanning highways, railways, ports, and airports — as a key driver of the growth rate. This infrastructure-led demand has helped sustain momentum even as external headwinds, including US trade policy shifts, clouded the global outlook.

The strategy reflects a deliberate pivot: use public investment to crowd in private capital, while consumption holds up on the back of improved incomes and employment in services and manufacturing.

What the Government Said

'The GDP growth rate of 7.7 per cent in FY 2025-26 and 7.8 per cent in Q4 of FY 2025-26 reflect the inherent strength of our economy, the success of reforms, and the hard work of 140 crore Indians,' Modi said. He added that the government would leave no stone unturned to advance 'ease of living', 'ease of doing business', and expand opportunities for India's youth.

What Comes Next

With global trade uncertainty persisting and the IMF keeping a close watch on emerging-market outlooks, sustaining above-7 per cent growth into FY27 will depend on private investment picking up the baton from public capex. The double-digit performance in manufacturing and services provides a constructive base, but the primary sector's relatively modest showing underscores that rural income growth remains a variable to watch.