India GDP grows 7.8% in Q4 FY26, FY26 at 7.7%

A stronger-than-expected finish to FY26

India’s economy ended FY 2025-26 with a higher-than-expected growth print. Official data released on June 5 showed real GDP growth of 7.8% year-on-year in the January to March quarter (Q4 FY26). For the full year, real GDP growth was pegged at 7.7%, slightly above the government’s earlier estimate of 7.6%.

The headline numbers came despite expectations that global risks, including the US-Iran conflict, could weigh on the quarter’s growth. Instead, the Q4 print also came in above a CNBC-TV18 poll estimate of 7.3%, while the full-year reading beat the poll’s 7.5% expectation.

Key GDP numbers: real and nominal

The Ministry of Statistics and Programme Implementation (MoSPI) estimated real GDP at constant prices at ₹8,777,000 crore in Q4 FY26, up from ₹8,140,000 crore in the year-ago quarter. Nominal GDP for the same quarter was estimated at ₹9,465,000 crore, reflecting a growth of 9.1%.

For the full financial year FY26, real GDP was estimated at ₹32,312,000 crore compared with ₹29,989,000 crore in FY25, reflecting a real growth rate of 7.7%. Nominal GDP for FY26 was estimated at ₹34,636,000 crore, up from ₹31,807,000 crore in FY25, translating into nominal growth of 8.9%.

How the Q4 figure compared with the previous quarter

While Q4 was strong relative to expectations, it represented a mild moderation compared to the prior quarter. The economy grew 7.8% in Q4 versus 8% in the previous quarter, according to the reported data.

A key reason cited for the sequential moderation was weaker manufacturing momentum in the final quarter. Manufacturing growth in Q4 slowed to 7.3% from 12.8% in Q3, and manufacturing’s weight in GDP meant that the deceleration influenced the overall quarterly pace.

Sector-wise growth in Q4: services lead, industry steady

Quarterly sector data showed especially strong expansion in a broad set of services. Trade, hotels, transport, communication, broadcasting and storage-related services grew 12.5% year-on-year in Q4 FY26. Financial, real estate and professional services followed with growth of 10.4%.

On the industrial side, manufacturing grew 7.3% during the quarter, while construction expanded 8.4%. The primary sector registered growth of 3.2%, supported mainly by agriculture and fisheries.

FY26 drivers on the expenditure side

MoSPI’s release also pointed to demand-side support through consumption and investment. Private Final Consumption Expenditure (PFCE) and Gross Fixed Capital Formation (GFCF) expanded by more than 7.5% during FY26.

This matters because PFCE is a key proxy for household demand, while GFCF is closely tracked as a measure of investment activity and capacity creation. The combination suggests broad-based support for growth during the year, alongside the observed strength in services.

GVA signals and the role of prices

Beyond GDP, the provisional estimates also highlighted the trajectory of Gross Value Added (GVA), which strips out the effect of taxes and subsidies and is often used as a cleaner measure of underlying activity. Real GVA grew 7.9% in FY26 compared with 7.3% in the previous financial year.

Nominal GVA rose 9.1% to ₹31,487,000 crore. The gap between real and nominal growth rates reflected price effects alongside higher output, consistent with the larger nominal GDP base reported for the year.

High-frequency indicators cited alongside growth

The data summary also referenced a set of activity indicators that improved during FY26. Foodgrain production increased 5.3% during the year. Cement production rose 8.7%, and finished steel consumption grew 8%, indicating sustained demand in construction and industry-linked segments.

Transport and mobility indicators were also positive, with commercial vehicle sales up 12.6% and three-wheeler sales higher by 12.8%. Imports of machinery and equipment jumped 19.3%, a metric often watched as a signal of capital expenditure and capacity expansion.

What the Prime Minister and MoSPI said

Prime Minister Narendra Modi welcomed the FY26 growth print, describing it as reflecting the “inherent strength” of the economy, the “success of reforms” and the “hard work of 140 crore Indians.” In his post, he also said the government would continue efforts to improve “Ease of Living,” “Ease of Doing Business,” and expand opportunities for youth.

MoSPI reiterated that real GDP for FY26 was estimated at ₹32,312,000 crore at constant prices versus the FY25 first revised estimate of ₹29,989,000 crore. It also flagged the nominal GDP increase to ₹34,636,000 crore in FY26.

Market impact: what the data changes and what it does not

The GDP print primarily influences market expectations around growth-sensitive sectors and the demand outlook. In this release, services segments showed the strongest year-on-year momentum in Q4, while construction also remained firm. That combination typically aligns with sustained urban consumption and ongoing project activity.

At the same time, the quarter highlighted a visible slowdown in manufacturing growth versus Q3, even as annual manufacturing growth was reported as 10.7% despite the final-quarter moderation. For investors, the split underscores the importance of tracking both quarterly swings and full-year trends when interpreting industrial momentum.

Analysis: why FY26’s 7.7% matters

The FY26 growth estimate of 7.7% is notable for two reasons captured in the official and poll comparisons. First, it edged past the government’s earlier 7.6% estimate. Second, it exceeded several market expectations, including the referenced poll ranges, and came despite concerns that geopolitical disruptions could weigh on the headline number.

The sector mix in Q4 also matters. A 12.5% rise in trade, hotels, transport, communication and storage-related services signals strong services demand, while 10.4% growth in financial, real estate and professional services points to activity in credit-linked and business services segments. Manufacturing’s slower Q4 pace, however, suggests that the industrial cycle can still be uneven quarter to quarter.

Key figures at a glance

Sector growth snapshot for Q4 FY26

Conclusion

India’s FY26 growth outcome combines a strong Q4 print with steady full-year expansion, with services and construction leading sector momentum and consumption and investment both expanding at more than 7.5% on the expenditure side. The official release sets the baseline for how markets and policymakers assess the pace of activity heading into the next fiscal updates from MoSPI.