The Indian economy is seen expanding at 7.4 per cent in the current financial year of FY26, significantly higher than the 6.5 per cent growth clocked in the previous FY. A financial year begins on April 1 and ends on March 31.
The data released by the Ministry of Statistics and Programme Implementation on Wednesday, including the Gross Domestic Product (GDP) growth projections, as part of the First Advanced Estimates will undergo revision through the year.
Significance for Budget
Finance Minister Nirmala Sitharaman will table the Union Budget within a month’s time. There is some uncertainty on the date because the usual date of February 1 is falling on a Sunday. But many of the projections will be based on the data released by the Ministry on Wednesday as part of the First Advanced Estimates. The full year data will be released only after the financial year is complete but these estimates help North Block create a set of policy architecture for the upcoming year, based on revenue and expenditure projection. Tax projections are also based on the GDP data.
Key highlights of First Advanced Estimates
- Real GDP has been estimated to grow by 7.4 per cent in FY26 against the growth rate of 6.5% during FY 2024-25.
- Nominal GDP is estimated to grow at 8.0 per cent in FY 2025-26.
- Buoyant growth in services sector has been found to be a major driver in the estimated Real GVA growth rate of 7.3 per cent in FY26.
- Financial, real estate and professional services and public administration, defence & other services in the tertiary Sector have been estimated to attain a growth rate of 9.9 per cent at Constant Prices in FY 2025-26.
- Trade, Hotels, Transport, Communication & Services related to Broadcasting Sector has been estimated to grow by 7.5 per cent at Constant Prices in FY 2025-26.
- Manufacturing and Construction in the Secondary Sector has been estimated to achieve a growth rate of 7.0 per cent at Constant Prices in FY 2025-26.
- Agriculture & Allied Sector (3.1 per cent) and Electricity, Gas, Water Supply & Other Utility Services Sector (2.1 per cent) have seen moderate growth rate in GVA at Constant Prices during FY 2025-26.
- Real Private Final Consumption Expenditure (PFCE) has been estimated to attain a growth rate of 7.0 per cent during FY 2025-26.
- Gross Fixed Capital Formation (GFCF) has been estimated to have 7.8 per cent growth rate at Constant Prices during FY 2025-26, compared to 7.1 per cent growth rate in previous FY.
The economy continued to expand at a faster-than-anticipated rate in July-September, with GDP growth rising to a six-quarter high of 8.2 per cent on the back of near double-digit growth in the services sector. The manufacturing sector, too, has clocked its fastest pace of expansion in six quarters.
What is a Budget
When Sitharaman stands in Parliament to give her Budget speech, she will also present the government’s books of accounts: its receipts and expenses. The tax paid by common people and corporate houses constiture a major chunk and falls under the cateogary of tax receipts. Then there are non-tax receipts, say interest and profits from government investments or stakes. The third is capital receipts, say from divesting government stake in an entity.
Expenses can also be of a revenue (paying salaries and wages) or a capital nature (building infrastructure).
What is GDP
The gross domestic product is the total of the goods and services produced in a country in a given period, generally a three-month period called a quarter or a financial year.
