New Delhi is buzzing with optimism as economists predict a surge in India’s economic growth during the fourth quarter of fiscal year 2026. High-frequency indicators are flashing green, suggesting the nation’s GDP could hit a revised growth rate of 7.6 percent for FY26, up from the earlier 7.4 percent estimate based on the new GDP series.
Jahnavi Prabhakar, economist at Bank of Baroda, remains steadfast in her outlook. ‘The changes in the new series won’t significantly or persistently impact the fiscal deficit ratio,’ she noted. For FY27, she sticks to a growth projection between 7 and 7.5 percent.
This upward trajectory is fueled primarily by the manufacturing sector, which is expected to roar at 11.5 percent growth— a jump from the previous 9.3 percent forecast. This sector has shown consistent expansion over the past three years, acting as a cornerstone of India’s economic resurgence.
Trade, hospitality, and tourism sectors are also poised for robust performance, with an anticipated 10.1 percent rise in FY26, compared to 6.6 percent last year. In nominal terms, exports are projected to grow from 8.3 percent to 9.6 percent, while private final consumption expenditure (PFCE) maintains steady 8.9 percent growth, bolstering overall momentum.
Recent rationalization of GST rates has sparked a notable uptick in consumption demand, particularly in urban areas—a positive signal for sustained recovery. However, uncertainties linger around tariffs, especially with recent U.S. changes, though new trade agreements with other nations could mitigate potential downsides.
The new GDP series reveals that Gross Value Added (GVA) grew 7.8 percent in Q3 FY26, surpassing the 7.4 percent from Q3 FY25. Both services and manufacturing contributed significantly, with trade and hotels leading services at 11 percent growth, up sharply from 6.7 percent.
Economists emphasize that the rebasing of the GDP series is unlikely to materially affect the fiscal ratio, paving the way for continued policy flexibility. As India navigates global headwinds, these indicators point to a resilient economy ready to accelerate into 2026.