India’s GDP growth slowed to 7.8% in October-December from a year earlier under a new data series, down from 8.4% in the previous quarter.
India’s economic growth slowed in the October-December quarter as government spending and private investment eased, but it remained the world’s fastest-growing major economy, helped by strong consumption.
The GDP projection under the new data series marginally boosted growth for FY26. The economy is estimated to grow by 7.6% in FY26, according to data from the National Statistics Office. It had been forecast to grow by 7.4% under the old data series.
Consumption remains strong
Despite those pressures, India’s private consumption remained strong, expanding by 8.7% year-on-year in the October-December period, compared with 8% in the previous quarter.
As per the latest data, Government spending rose 4.7% year-on-year in October-December, down from a 6.6% increase the previous quarter, while private investment grew 7.8%, lower than the 8.4% growth a quarter ago.
“There has been reasonable traction in consumption demand amidst the recent rationalisation of GST rates. A recovery in urban consumption bodes well for the growth outlook. Notably, some uncertainty pertains on the tariff front specially US, given the recent changes. However, the new trade deals with other countries might offset any such negative impact.” Jahnavi Prabhakar, Economist at Bank of Baroda said.
Key sectorial growth
India’s manufacturing sector grew by 13.3% in the third quarter, compared with 13.2% a quarter ago, data showed. The financial services and hospitality sectors held strong and growth in farm output, a sector which employs more than 40% of the workforce, slowed to 1.4% in the current fiscal year from 2.3% a quarter ago.
Per Capita Income
In the latest GDP estimates, Per Capita Income, at current prices, is estimated at Rs 1,92,774 for FY25.
Furthermore, the Per Capita Income for FY24 and FY23 was estimated at Rs 1,76,465 and Rs 1,59,557.
FY27 forecast
For FY27, India’s projected economic growth has been revised to 7-7.4% under the new series, said Chief Economic Adviser V Anantha Nageswaran after the data was released. In his annual report released last month, the economy was projected to grow at 6.8%- 7.2% in FY27.
Nageswaran said that India will comfortably cross the $4 trillion mark in the next financial year.
New data series
India has overhauled its statistical framework this year. As part of the changes, the government has widened its data sources to include Goods and Services Tax (GST) filings, corporate financial returns and digital platform data to improve coverage of economic activity.
At the core of the GDP overhaul is the shift to adopting more granular price deflation to improve accuracy. Until now, it has largely deflated only input prices, with heavy reliance on the wholesale price index.
The changes are expected to address concerns raised by the International Monetary Fund last year about India’s national accounts methodology, including the outdated FY12 base year and reliance on wholesale prices, for which it assigned the framework a “C” rating.