At a time when the global economy is grappling with uncertainty, India continues to stand out as a beacon of growth and stability. Recent projections by international and domestic agencies indicate that India’s economy will maintain strong momentum in the financial year 2025–26, even as growth slows across much of the world due to geopolitical tensions, policy uncertainty, and trade disruptions.
According to a United Nations report, India’s Gross Domestic Product (GDP) is expected to grow by 6.6 per cent, while the Indian government’s first advance estimates, released by the National Statistics Office (NSO), place growth even higher at 7.4 per cent. This marks a significant improvement over the 6.5 per cent growth recorded in the previous financial year and reinforces India’s position as the fastest-growing major economy globally.
Global Slowdown, India’s Strong Performance
The contrast between India and the rest of the world is striking. Global economic growth is projected to slow to 2.7 per cent in 2026, as nations face challenges from geopolitical conflicts, inflationary pressures, and policy uncertainty. Against this backdrop, India’s ability to sustain high growth reflects the strength of its domestic demand, expanding services sector, and ongoing structural reforms.
Economists note that while many economies are dependent on exports and vulnerable to global trade disruptions, India’s growth is largely supported by internal consumption and investment. This has helped the country remain resilient despite ongoing trade tensions and the absence of a formal trade agreement with key partners such as the United States.
Services Sector: The Engine of Growth
The services sector continues to be the primary driver of India’s economic expansion. Real Gross Value Added (GVA) from services is estimated to grow by 7.3 per cent in FY26. Within this sector, financial services, real estate, professional services, public administration, defence, and other services are projected to record robust growth of nearly 9.9 per cent at constant prices.
Trade, hotels, transport, communication, and broadcasting-related services are also expected to perform well, with output projected to rise by 7.5 per cent. This reflects the revival of travel, tourism, logistics, and digital services, all of which play a crucial role in employment generation and urban economic activity.
Industry and Infrastructure Maintain Momentum
India’s industrial sector is also showing steady progress. Manufacturing and construction activities are forecast to grow by around 7 per cent in FY26. Continued government focus on infrastructure development, housing, and capital expenditure has supported construction activity, while manufacturing has benefited from improved capacity utilisation and policy initiatives aimed at strengthening domestic production.
These sectors are critical for long-term economic growth, as they generate employment, boost investment, and enhance productivity across the economy.
Agriculture and Utilities: Moderate but Stable Growth
The agriculture and allied sector, which supports a significant portion of India’s population, is expected to grow at a moderate pace of 3.1 per cent. While this growth is slower compared to services and industry, it reflects stable agricultural output amid changing climatic conditions.
Meanwhile, utility services such as electricity, gas, water supply, and other related services are projected to grow by 2.1 per cent, indicating steady but restrained expansion.
Economic Size and Global Standing
At the projected pace of growth, India’s nominal GDP is expected to reach approximately ₹357 trillion by the end of FY 2025–26. This underscores the country’s growing economic scale and global importance. However, despite rapid growth, India may not yet surpass Japan’s economy in nominal terms during the current financial year, as Japan’s GDP remains higher based on available projections.
Outlook and Future Revisions
Looking ahead, India is expected to revise its GDP calculation methodology in the coming months, a move that could lead to changes in growth estimates. Such revisions are part of the normal process of improving data accuracy and reflecting structural changes in the economy.
Despite global uncertainties, analysts remain optimistic about India’s medium-term prospects. Stable macroeconomic fundamentals, strong services performance, and continued investment in infrastructure and digital growth position India well for sustained expansion.
Conclusion
In a world facing economic slowdown and uncertainty, India’s growth story stands out as one of resilience and opportunity. With robust services-led expansion, steady industrial growth, and strong domestic demand, the Indian economy continues to chart a confident path forward. As global challenges persist, India’s ability to maintain high growth reinforces its role as a key driver of future global economic momentum.