India’s economy beats estimates, posts robust 7.7% growth in FY26 despite West Asia crisis

India’s economy expanded by 7.7% in 2025-26, beating the government’s own estimates announced earlier this year, despite headwinds from the West Asia conflict that began towards the end of February and intensified in March, as per data released by the National Statistics Office (NSO) on June 5.

The country’s gross domestic product (GDP) grew by better-than-expected 7.8% in January-March quarter. Though, this is slightly down from upwardly revised 8% recorded in October-December 2025 period, it is above the average growth of 7.4% in the previous 10 quarters.

The strong growth in the January-March quarter was driven by healthy private consumption and fixed investments.

Both the Q4 and the full year FY26 growth numbers are better than the second advance estimates, released by the National Statistics Office (NSO) in February. It had pegged the FY26 growth at 7.6%

“India’s growth momentum remains strong! GDP growth rate of 7.7% in FY 2025-26 and 7.8% in Q4 of FY 2025-26 reflect the inherent strength of our economy, the success of reforms and the hard work of 140 crore Indians,” said Prime Minister Narendra Modi.

“We shall leave no stone unturned to further ‘Ease of Living,’ ‘Ease of Doing Business’ and increase opportunities for our youth,” Modi said in a post on X.

Union Finance Minister Nirmala Sitharaman also reiterated the government’s commitment to “further drive the ‘Reform Express’ with decisive policy measures to ensure positive economic momentum amidst the global challenges.”

The NSO released the full year FY26 GDP with the new base year 2022-23. The FY26 growth is the highest in four years. It stood at 7.1% FY25 and 7.2% in FY24 at constant 2022-23 prices.

The nominal GDP growth in FY26 was 8.9%, down from 9.7% recorded in the previous year.

The real GDP or GDP at constant prices is estimated at Rs 323.12 lakh crore in the FY 2025-26, while the nominal GDP or GDP at current prices is estimated to attain a level of Rs 346.36 lakh crore during the same year. The difference is because of inflation adjustments.

The GDP growth is projected to decline sharply in the current financial year. The Reserve Bank of India (RBI) on Friday lowered its projection on India’s economic growth for FY27 to 6.6%.

“Growth is set to weaken amid multiple headwinds, including higher prices of crude and other commodities, softer global growth and forecast of a below-normal monsoon,” said Dharmakirti Joshi, Chief Economist, Crisil.

Chief Economic Adviser V Anantha Nageswaran expressed hope that India’s GDP growth may bounce back to above 7% in the FY28 despite slipping in the current fiscal.

“Even if the growth were to slip below 7% (in FY27) as the RBI forecast suggests, macro stability measures and supply assurances will bring us back to a 7% plus growth track in FY28 or as soon as external conditions improve,” Nageswaran told reporters.

“While multiple risks in terms of inflationary pressures, imminent rate hikes, and persistent volatility continue to cast a shadow over FY27 expectations, todays GDP print raises hope of limited disruptions as domestic strength offsets external pressure,” said Rajni Thakur, Chief Economist, L&T Finance.