Forbes India

India grew at 7.8% in Q4FY26, growth estimates for FY26 pegged at 7.7%

The Indian economy grew at 7.8 percent in the fourth quarter of FY26 compared to 8 percent in the previous quarter, according to government data released on Friday. This is higher than the growth rate for Q4FY25 which was 7 percent.The gross value added (GVA) grew at 7.9 percent in Q4FY26 compared to 8 percent in the previous quarter.Madan Sabnavis, chief economist at Bank of Baroda says that Q4 performance was good for the economy while adding that the numbers indicate that the West Asia war effect was muted as well as the corporate performance was good.The government also released estimates for the full financial year and pegged real gross domestic product at Rs 323.12 lakh crore for FY26 at a growth rate of 7.7 percent compared to 7.1 percent in FY25. GVA for the complete financial year also likely grew at 7.9 percent in FY26 in real terms compared to 7.3 percent in the previous fiscal year.Aditi Nayar, chief economist at ICRA says that the GDP figures show that the economy did not witness a material impact of the West Asia conflict. “Given the uncertainty around the resolution of the conflict, elevated energy prices for an extended period poses a downside risk to growth in the near term, including muted prospects for investment demand, negative impact on corporate profitability and dampening consumer sentiments,” Nayar says adding that the potential development of El Niño conditions and weak monsoon forecast for 2026 have dulled the agricultural outlook and rural demand prospects for H2 FY2027.The economy is likely to register a nominal growth rate, which is output not adjusted for inflation, of 8.9 percent in FY26.Nayar says with the West Asia crisis expected to transmit to lower growth outcomes, particularly in H1 FY2027, that nominal GDP expansion is set to improve to above 12 percent in FY2027 from 8.9 percent in FY2026, on the back of unpalatably higher inflation.A sector-wise analysis shows that trade, hotels, transport and communication services showed the highest GVA growth rate in real terms at 11 percent in FY26, while manufacturing registered a growth rate of 10.7 percent. Construction grew at 7.4 percent and financial and real estate services did so at 10.4 percent in FY26. Growth in mining and quarrying halved to 5.2 percent in FY26 from 11.7 percent in the previous fiscal. Meanwhile, agriculture grew at 3 percent in FY26 compared to 4.2 percent in FY25.This is the first GDP data release after Ministry of Statistics and Programme Implementation revised the annual GDP release date from the last working day of May to June 7 primarily to improve data quality. The key reason cited was that certain critical datasets required for GDP compilation become available only after a lag of up to two months, notably, listed companies are allowed up to 60 days from the end of the financial year to file audited accounts. The Ministry also noted the move aligns with prevailing international best practices.