The ministry of statistics & programme implementation (MoSPI) has released the New GDP Series with 2022-23 as base year, revising 2025-26 growth to 7.6 per cent (against the first advance estimate of 7.4 per cent for 2025-26 under the old series). This is 50 point higher than the 7.1 per cent of 2024-25 – a creditable jump. Likewise, Q3 growth has been upped to 7.8 per cent against 7.4 per cent in the old series. The celebratory mood, however, should be tempered with realism. For one thing, 7.6 per cent is not 8 per cent, the lowest magic number required, if we are to tackle the problem of high unemployment. It has been long said that India requires a sustained economic growth rate of over 8-8.5 per cent to generate sufficient jobs for its growing workforce.
It is the downward revision of nominal GDP, which should cause some worry. (Nominal GDP represents the current-price value of the economy and is crucial for calculating fiscal ratios.) And so, while real growth has been upgraded, the nominal size of the economy has been revised downward. The nominal GDP for 2025-26 is estimated at Rs345.47 lakh crore – down from the Rs357 lakh crore estimated under the 2011-12 base series. This is about 3.3 per cent smaller than earlier estimates under the old series. In percentage terms, the 2025-26 nominal growth rate is pegged at 8.6 per cent – lower than the trendline 10-11 per cent. The size of the economy for 2023-24 and 2024-25 has also been revised downward by about 3.8 per cent each.
In dollar terms, India’s economy is now estimated at roughly $3.8 trillion – down from $3.9 trillion. It means we fell one step behind in taking over Japan as the world’s fourth-largest economy, thus possibly pushing further our $5 trillion target. In any case, while earlier projections aimed for 2024-25, current estimates as of late 2025/early 2026 suggest India will reach this milestone closer to 2028-29.
Also, since fiscal indicators such as fiscal deficit-to-GDP and debt-to-GDP are expressed as a percentage of nominal GDP, a lower GDP base automatically increases these ratios. The fiscal deficit for 2025-26 is now estimated at 4.51 per cent of GDP instead of 4.36 per cent, though the absolute deficit amount remains unchanged. Similarly, the debt-to-GDP ratio for 2026-27 is pegged at 57.5 per cent, compared to the earlier target of 55.6 per cent. This makes the government’s debt consolidation path toward its 2030-31 target of reducing debt to 50 per cent of GDP steeper.
The new GDP series introduced by the MoSPI comes with 2022-23 as the base year, replacing the earlier 2011-12 base year. In the normal course, base year revision is a standard statistical exercise undertaken periodically to reflect structural changes in the economy, incorporate new data sources, and improve methodology. The most important methodological change is the shift from the ‘single-deflator’ method to the ‘double-deflation’ method for calculating real Gross Value Added. Earlier, a single price deflator was used to adjust nominal values to real terms in most sectors. This could sometimes overstate growth when input and output prices behaved differently. Under double deflation, both inputs and outputs are adjusted separately using their respective inflation rates. This allows for more accurate measurement of real economic growth and aligns India’s methodology with international best practices. The new series also incorporates additional data sources, such as GST data, e-Vahan vehicle registration data, Annual Survey of Unincorporated Sector Enterprises and Periodic Labour Force Survey.
The Sectoral Growth Trends in 2025-26 are a mixed bag. The secondary sector is expected to grow at 9.5 per cent in 2025-26 – up from 7.3 per cent in 2024-25. Manufacturing is projected to grow at 12.5 per cent, compared to 8.3 per cent in the previous year. Construction growth is estimated at 6.9 per cent, slightly lower than 7.1 per cent in 2024-25.
The worrisome part of the new data dump is that the primary sector is expected to slow to 2.8 per cent in 2025-26 from 5 per cent in 2024-25. Agriculture growth is estimated at 2.5 per cent – down from 4.3 per cent. This should concern our policymakers, as agriculture is a source of economic sustenance for almost 50 per cent of our population. The other worrisome growth is from mining & quarrying, which is estimated at 4.1 per cent – down from the 11.7 per cent registered in 2024-25 – and certainly needs some boosters.
It will be interesting to see what the new year holds. By all accounts, 2026-27 too is expected to see moderate growth, thanks to the absence of consumption boosting measures in the budget and given that the GST rationalisation impact may not last long. A collateral hit may come from the Iran war, if it lasts long.