India Q3 GDP Rises To 7.8%, Full-Year FY26 Growth Stands At 7.6%; What's Next For Indian Economy?

India Q3 GDP Growth Data: India's economy recorded strong growth in the October-December quarter of FY26, with real Gross Domestic Product (GDP) expanding to 7.8%, according to data released by the Ministry of Statistics and Programme Implementation on Friday. The Q3 GDP figures were published alongside a revised GDP series, which shifts the base year from 2011-12 to 2022-23, marking a significant update to the country's national accounts framework.

Meanwhile, the real GDP growth rate for the full financial year 2025-26 stood at 7.6% and nominal GDP growth was pegged at 8.6%.

The latest economic growth underscores India's sustained resilience. Vikrant Chaturvedi, Associate Director - Research, Brickwork Ratings said the performance was riven by robust manufacturing and services activity.

On the base year change, Chaturvedi added, the rebasing of national accounts to 2022-23 is analytically significant as it captures structural changes in the economy, incorporates new data sources such as GST and updated surveys, and strengthens estimation methodologies by adopting internationally aligned statistical practices. This ensures that growth estimates are more representative of the current economic structure, where digital services, modern manufacturing, and evolving consumption patterns play a larger role.

India Q3 GDP Data: Manufacturing Sector Major Driver

The manufacturing sector saw robust growth during the third quarter and it contributed towards the resilient performance of the economy. As per the MOSPI data, the sector has attained double-digit growth rates in FY 2023-24 and FY 2025-26.

Secondary and tertiary sectors also saw a boost in performance and contributed to the overall economic growth by registering an above 9.0% growth rate in FY 2025-26. As per MOSPI data, the 'Trade, Repair, Hotels, Transport, Communication & Services related to Broadcasting, Storage' sector attained a growth rate of 10.1% at constant prices in FY 2025-26.

Real GDP Growth Rate

The real GDP growth rate, also known as GDP at constant prices, is estimated to reach a level of Rs 322.58 lakh crore in the financial year 2025-26, against the first revised estimate (FRE) of GDP for the year 2024-25 of Rs 299.89 lakh crore. The growth rate in real GDP during 2025-26 is estimated at Rs 318.07 lakh crore in 2024-25, showing a growth rate of 8.6%.

However, Q3 GDP data moderated from the previous quarter. According to Aditi Nayar, Chief Economist, ICRA, the moderation was expectedly driven by the agriculture and the non-manufacturing industrial sectors, including mining, electricity and construction segments. Encouragingly, manufacturing GVA expanded by double digits for the fifth consecutive quarter in a row in Q3 FY2026, while services GVA growth also inched up to a 7-quarter high of 9.5% from 9.3% in the previous quarter.

Furthermore, the Second Advance Estimate (SAE) for GDP for FY2026 has been pegged to expand by a robust 7.6% in FY2026, up from 7.1% in FY2025, which is as per Nayar, with the manufacturing and services segments on the production side and the PFCE and GFCF on the expenditure side, expected to witness an improvement in their growth rates between these years.

Given this trend, Nayar said, the trends in 9M FY2026, the GDP growth is implicitly pegged to decelerate to a 3-quarter low of 7.3% in Q4 FY2026, which is, nonetheless, quite healthy.

India Q2 GDP Growth Data

In the second quarter of financial year 2025-26, the Indian economy continued to grow at a faster-than-anticipated rate due to robust growth rising to a six-quarter high of 8.2% on the back of near double-digit growth in the services sector. Despite the monsoon, the manufacturing sector also expanded at the fastest pace in six quarters.

India GDP Estimates FY27:

ICRA currently projects the GDP growth at a healthy ~7.0% in FY2027, amid favourable developments including the interim deal with the US with a lower tariff rate, improved prospects for domestic investment, aided by the robust hike in Central capital spending included in the Union Budget. The reduction in GST rates, cumulative 125 rate cuts, as well as lower-than-expected rise in food inflation, along with upbeat farm sector trends portend a favourable outlook for private consumption in the upcoming fiscal.

From the perspective of the monetary policy, Nayar said the real GDP growth for H1 FY2026 has been revised lower to ~7.6% as against 8.0% estimated as per the 2011-12 series, which justifies the rate actions through the course of the fiscal. However, growth has remained quite strong, and ICRA currently believes that there is a higher likelihood of a prolonged pause on the policy rate, amid expectations of a base-led uptick in the CPI inflation in the near term.