India’s growth story is gaining steam, with economists raising the FY26 GDP growth forecast to 7.6 percent from 7.4 percent, driven by promising high-frequency data and the updated GDP series. The fourth quarter of FY26 looks particularly bright, potentially marking an acceleration in economic activity.
Bank of Baroda economist Jahnavi Prabhakar highlighted that the new series adjustments pose minimal long-term risk to the fiscal deficit. ‘We’re holding our FY27 growth estimate at 7-7.5 percent,’ she affirmed, underscoring confidence in sustained momentum.
Manufacturing stands out as the star performer, with double-digit 11.5 percent growth (previously 9.3 percent) expected, building on three years of steady gains. This industrial strength is complemented by vibrant activity in trade, hospitality, and tourism, forecasted at 10.1 percent—well above last year’s 6.6 percent.
On the nominal front, export growth is revised upward to 9.6 percent from 8.3 percent, paired with stable 8.9 percent expansion in PFCE. GST reforms have ignited consumption, especially urban demand, injecting fresh vitality into the economy.
Yet, tariff uncertainties, notably from U.S. policy shifts, cast a shadow. Counterbalancing this, prospective trade pacts with other countries offer reassurance.
Q3 FY26 data under the new series shows GVA up 7.8 percent versus 7.4 percent in the prior year, powered by services (trade/hotels at 11 percent from 6.7 percent) and manufacturing. The rebasing effect on fiscal metrics is expected to be negligible, allowing focus on growth drivers.
As global challenges persist, India’s diversified sectoral strengths position it for robust FY26 performance, with Q4 poised to deliver the knockout punch.