Base Year Revision Lifts India’s 2025-26 GDP Growth to 7.6%

India’s economy is projected to grow 7.6% in 2025–26 under the second advance estimate of the newly released GDP series with base year 2022–23. This marks an upward revision from the 7.4% estimate under the earlier 2011–12 series. The data, released by the Ministry of Statistics and Programme Implementation, recalibrate recent growth trends while incorporating updated data sources and improved methodology.

Under the new series, real GDP for 2025–26 is estimated at ₹322.58 trillion, up 7.6% from ₹299.89 trillion in 2024–25. Nominal GDP is projected at ₹345.47 trillion, reflecting growth of 8.6%.

Real gross value added is estimated to expand 7.7% to ₹294.40 trillion, while nominal GVA is seen rising 8.7% to ₹313.61 trillion.

The revision also alters historical growth patterns. Growth for 2024–25 has been revised upward to 7.1% from 6.5% under the old series, while 2023–24 growth has been marked lower at 7.2% compared with 9.2% previously.

These changes have fiscal implications. Aditi Nayar, Chief Economist at ICRA Ltd, said a lower nominal GDP denominator implies the fiscal deficit-to-GDP ratio would be roughly 15–20 basis points higher on average for recent years than previously estimated. 

On current assumptions, she estimates the fiscal deficit target for 2026–27 could stand near 4.46% of GDP, compared with 4.3% in the Budget, assuming nominal growth of around 10%. The debt-to-GDP ratio may also be about 1.9 percentage points higher at 57.5% for 2026–27, making the consolidation path steeper than previously envisaged.

Quarterly trends indicate some moderation in momentum. As per the dataset accompanying the new series, real GDP growth eased to 7.8% in the October–December quarter of 2025–26 from 8.4% in the preceding quarter, although both readings remain robust. 

Nayar attributes the moderation largely to agriculture and non-manufacturing industrial segments such as mining, electricity and construction. Encouragingly, manufacturing GVA expanded at a double-digit pace for the fifth consecutive quarter, while services GVA growth rose to a seven-quarter high of 9.5%.

Despite these adjustments, the broader growth narrative remains intact. Unlike the 2015 revision, which significantly altered growth readings by shifting from GDP at factor cost to GDP at market prices and updating the base year from 2004–05 to 2011–12, the current revision does not dramatically reshape India’s medium-term trajectory. Instead, it smoothens volatility and tempers some of the sharper swings observed in earlier estimates.

The new series incorporates updated consumption weights, expanded coverage of corporate and informal sector activity, and administrative datasets such as goods and services tax filings, e-Vahan vehicle registrations and digital payment transactions. A key shift is the expanded use of double deflation, under which output and intermediate consumption are deflated separately to derive real value added. The earlier single-deflator approach could overstate real growth when input costs rose faster than output prices.

The savings and investment picture remains supportive. Gross saving as a percentage of GDP at current prices is estimated at 34.9%, with household savings at 21.7%, suggesting continued domestic funding capacity for investment-led growth.

The revision also comes amid heightened scrutiny of India’s statistical framework. In November, the International Monetary Fund rated India’s national accounts at “C”, flagging methodological and transparency gaps. Earlier this month, the statistics office released a new consumer price index series that pointed to somewhat lower underlying price pressures than previously estimated.

Overall, the 2022–23 base revision modestly strengthens the growth outlook for 2025–26 while improving data granularity and methodological robustness.