Fuelled by strong performance of services sector and manufacturing, real Gross Domestic Products (GDP) growth for Indian economy is estimated at 7.4 per cent for current fiscal year as compared to 6.5 per cent of the last fiscal, Statistics Ministry reported on Wednesday. Although nominal growth is at 8 per cent, lower than the budget estimates, economists believe it will not impact fiscal deficit for the current fiscal.
The latest figures mark the final release of the 2011–12 series. As these numbers are extrapolated from high-frequency economic indicators available through November, they may be subject to revision in upcoming reports. Notably, a new growth data series with a 2022–23 base year is scheduled for release on February 27. This update will include the Second Advance Estimates for the current fiscal year, along with revised annual and quarterly GDP estimates for the past three years, all aligned with the new base year.
According to data released by National Statistics Office (NSO), services sector estimated to grow by 9.1 per cent in FY26, compared to last year growth of 7.2 per cent. Manufacturing growth is expected to touch 7 per cent as compared to 4.5 per cent. Per capita national income, is expected to increase by Rs 16,025 yearly to Rs 2,47,487.
“With favourable factors like GST rationalisation, lower income tax burden, low inflation, cut in interest rates and strong rural demand, the growth momentum was expected to be healthy. However, we need to be wary of the heightened global uncertainties and trade barriers imposed by the US and the impact of that on our exports and capital flows,” said Chief Economist of CareEdge.
While the estimated nominal growth rate of 8 per cent falls significantly short of the 10.1 per cent budget target, the fiscal deficit outlook remains stable. According to an tax expert, the first advance estimate places the nominal GDP at Rs 357.1 lakh crore. A 4.4 per cent deficit against this figure remains on track because the base GDP for 2024-25 was revised upward to Rs 330.7 lakh crore from the budgeted Rs 324.1 lakh crore. Essentially, a higher starting base has offset the slower-than-expected growth.
“The lower nominal GDP growth has, however, implications for GoI’s gross tax revenues. In the first eight months of the current fiscal year, the realised growth of GTR (Gross tax Revenue) was 3.34 per cent. The relatively lower nominal growth combined with a relatively lower than budgeted buoyancy of 1.07 over the revised estimates of 2024-25 may result in lower RE numbers for GoI’s GTR in 2025-26 as compared to the budget estimates,” he said.
Source from: https://www.thehindubusinessline.com/economy/economic-growth-in-fy26-estimated-at-74/article70481873.ece
