India's Q3 GDP Growth Stands at 7.8% Under New Base Year

Introduction to New GDP Data

India's economy expanded by 7.8% in the third quarter of the fiscal year 2025-26 (October-December 2025), according to official data released by the Ministry of Statistics and Programme Implementation (MoSPI) on February 27, 2026. This release is particularly significant as it introduces a new GDP series with the base year shifted to 2022-23 from the previous 2011-12. The updated methodology also led to an upward revision of the full-year growth forecast for FY26 to 7.6%, reinforcing India's position as the world's fastest-growing major economy.

Detailed Quarterly Performance

The 7.8% growth in real GDP for Q3 FY26 marks a moderation from the revised 8.4% growth recorded in the second quarter (July-September 2025). The Q2 figure was itself revised upwards from the initially reported 8.2%. Despite the sequential slowdown, the Q3 performance is a substantial improvement over the 6.2% growth seen in the corresponding quarter of the previous fiscal year (Q3 FY25). According to the National Statistical Office (NSO), real GDP in Q3 FY26 is estimated at ₹84.54 lakh crore, up from ₹78.41 lakh crore in Q3 FY25. Nominal GDP, which includes inflation, grew by 8.9% during the same period.

The Significance of the New Base Year

The shift in the GDP base year to 2022-23 is a crucial update designed to capture the structural transformations in the Indian economy over the last decade. Officials stated the revision was necessary to incorporate more reliable and current data sources. The new series integrates granular information from Goods and Services Tax (GST) records, vehicle registration data from the e-Vahan portal, and natural gas consumption figures. This overhaul aims to provide a more accurate measurement of economic activity, including the expanding digital economy and the informal sector, which is now better tracked through quarterly bulletins.

Rationale Behind the Timing

According to Saurabh Garg, Secretary in the Ministry of Statistics and Programme Implementation, the revision was delayed due to major economic events. The introduction of the GST regime and the subsequent disruptions caused by the COVID-19 pandemic necessitated a postponement. With stable and comprehensive data now available from these new systems, the ministry proceeded with the update. The government intends to revise the base year more frequently, possibly every five years, to keep the national accounts reflective of the contemporary economic landscape.

How the Revision Reshapes Economic Narrative

Changes in the base year and calculation methodology can significantly alter headline growth figures. A similar revision in 2015, which shifted the base year to 2011-12, had a notable impact. For instance, the estimated GDP growth for the fiscal year 2013-14 was revised sharply upward from 4.7% to 6.9%. The current update is expected to provide deeper insights into the economy's performance and could influence when India is projected to surpass Japan as the world's fourth-largest economy.

Performance Against Projections

The official growth figure of 7.8% landed comfortably within the range of analyst expectations, which varied widely from 7.2% to 8.1%. State Bank of India (SBI) Research had projected a robust growth of 8.0-8.1%, citing strong high-frequency indicators and resilient domestic demand. Other agencies like ICRA and CareEdge had forecast a more moderate expansion of 7.2%. The final number underscores the economy's sustained momentum despite global uncertainties.

Key Economic Indicators Summary

A comparison of the latest official figures with previous estimates highlights the impact of the new series and the economy's underlying strength.

Economic Outlook for FY27

Looking ahead, the economic outlook remains positive, though some moderation is anticipated. The Economic Survey for FY26 projected that India's potential GDP growth is around 7%, with estimates for FY27 falling in the range of 6.8% to 7.2%. The Reserve Bank of India (RBI) has also provided its projections for the upcoming fiscal year, estimating growth for Q1 and Q2 of 2026-27 at 6.9% and 7.0%, respectively. This outlook is supported by factors like rising employment and strengthening private consumption.

Drivers and Headwinds

The strong growth in Q3 was underpinned by resilient domestic demand, particularly in rural and urban consumption. An SBI Research report noted that 87% of 50 high-frequency indicators showed acceleration during the quarter. However, the global economic environment remains a key factor to monitor. Geopolitical tensions, high debt levels in other economies, and structural shifts like decarbonisation present potential headwinds that could impact global trade and investment flows.

Conclusion

The release of the Q3 FY26 GDP data confirms that India's economic momentum remains strong, with a 7.8% growth rate that surpasses many expectations. The introduction of the new 2022-23 base year marks a significant step in modernizing the country's economic statistics, offering a clearer view of its evolving structure. With a full-year growth forecast of 7.6%, India continues to be a bright spot in the global economy, driven by robust domestic fundamentals. Future data releases under the new series will be closely watched for further insights into the nation's economic trajectory.