India's Economy Surges 7.8%

The robust performance was largely driven by a surge in the manufacturing sector, which expanded by 13.3% in Q3, marking an eight-quarter high. The services sector also saw significant expansion at 9.5%, its best performance in seven quarters, with trade, hotels, and transport growing 10.1% for the full year. This is the first GDP data released under a new series with a revised base year of 2022-23, replacing the previous 2011-12 base. The updated methodology aims to better capture structural economic shifts by incorporating new data sources, such as GST transactions, and using techniques like double deflation to more accurately measure value added in manufacturing. Strong domestic demand underpinned the growth, with private consumption and gross fixed capital investment both growing by over 7% for the fiscal year. This resilience was further bolstered by festive season spending and an increase in government capital expenditure. The 7.8% Q3 growth follows an 8.4% expansion in the second quarter. This sustained momentum prompted the National Statistics Office to raise the full-year GDP growth estimate for fiscal year 2025-26 from 7.4% to 7.6%. Achieving this new annual target will require the economy to grow by at least 7.3% in the fourth quarter. Looking ahead, Chief Economic Adviser V. Anantha Nageswaran has raised the growth forecast for the upcoming fiscal year (FY27) to a range of 7-7.4%. The outlook is supported by a recent trade framework agreement with the U.S. and strong high-frequency economic indicators. With this performance, India remains the world's fastest-growing major economy. The sustained expansion recently pushed India's economy past Japan's to become the fourth-largest in the world, trailing only the United States, China, and Germany.