Has India’s FY26 GDP Forecast Been Raised to 7%?
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Synopsis
India's GDP forecast for FY26 has been elevated to 7%, marking a significant improvement from the previous estimate. This growth is fueled by private consumption and robust performance in manufacturing and services sectors. Discover how these factors are shaping the economic outlook.
Key Takeaways
- Crisil Limited has raised India's GDP growth forecast to 7 percent.
- First half of FY26 saw an impressive 8 percent growth.
- Private consumption is a significant driver of growth.
- The gap between real and nominal GDP is the smallest since FY2020.
- Lower inflation supports consumer spending.
New Delhi, Nov 29 (NationPress) The economic perspective for India in the current fiscal year has seen a positive shift, with Crisil Limited enhancing its GDP growth projection to 7 percent, an increase from its previous estimate of 6.5 percent.
This revision follows a remarkable 8 percent growth in the first half of FY26, driven by robust private consumption alongside advancements in manufacturing and services.
Dharmakirti Joshi, Chief Economist at Crisil Limited, highlighted that India’s real GDP growth of 8.2 percent in the second quarter surpassed expectations, although nominal GDP growth remained moderate at 8.7 percent.
He pointed out that the difference between real and nominal GDP is currently the smallest since the third quarter of FY2020.
Private consumption has been pivotal in enhancing real growth.
“The manufacturing and services sectors have also shown considerable improvement from the supply side,” Joshi remarked.
“A favourable statistical base—given that the economy grew merely 5.6 percent in the same quarter last year—also contributed to the elevated growth figures,” he added.
Moreover, a lower deflator, aided by diminishing inflation, has provided an additional boost. Both CPI and WPI inflation were lower in the second quarter than in the first, encouraging discretionary spending due to reduced food inflation.
Joshi anticipates that the third quarter will also reap benefits from these positive trends. While government investments are likely to stabilize, early indicators suggest a rebound in private investments.
He mentioned that the decrease and rationalization of GST rates is fostering private consumption, complemented by reductions in income tax and interest rates.
The interest rate cuts align with repo rate reductions by the Reserve Bank of India’s Monetary Policy Committee earlier this year.
Considering these trends, Crisil now forecasts a 7 percent growth rate for FY26. This projection reflects expectations of a softer second half, where GDP growth is likely to decelerate to 6.1 percent due to impacts from elevated US tariffs and the normalization of government capital expenditures.
However, Joshi cautioned that the sluggish nominal GDP growth—driven by a significant decline in inflation—poses certain risks.
Point of View
It's essential to recognize the upward revision of India's GDP forecast as a promising sign for the economy. It reflects resilience and potential growth driven by consumption and sectoral improvements. This positive outlook aligns with our commitment to delivering timely and relevant economic news to our audience.
NationPress
29/11/2025
Frequently Asked Questions
What is the revised GDP growth forecast for India in FY26?
The revised GDP growth forecast for India in FY26 is 7 percent, up from the previous estimate of 6.5 percent.
What drove the GDP growth in the first half of FY26?
The GDP growth in the first half of FY26 was driven by strong private consumption, manufacturing, and services activities.
What are the expectations for the third quarter of FY26?
The third quarter of FY26 is expected to benefit from positive factors, including early signs of a pickup in private investment.
How does inflation affect consumer spending?
Lower inflation rates can increase discretionary spending by consumers, as seen in the recent economic trends.
What risks are associated with the current economic outlook?
Risks include slow nominal GDP growth driven by a significant decline in inflation.
