India's Economy Expects 7.4% Growth in FY26: A Boost for the Union Budget

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{ "title": "India's Economy Expects 7.4% Growth in FY26: A Boost for the Union Budget", "article": "The Indian economy is projected to grow at 7.4% in the ongoing fiscal year, according to the National Statistical Office's (NSO) first advance estimates of gross domestic product. This growth is driven by improvements in manufacturing, services, and government expenditure. The manufacturing sector grew from 4.5% to 7%, while services expanded from 7.2% to 9.1%. Despite a slowdown in agriculture and construction, the overall economy is expected to perform well. The growth rate is in line with projections by the Reserve Bank of India and private forecasters, highlighting the resilience of the Indian economy amidst global challenges. The nominal GDP growth, which was lower than expected due to low inflation, is not expected to have a significant impact on tax collections and the fiscal deficit. The nominal GDP value has exceeded the assumed value in the 2025-26 Union Budget, which is a positive sign for the government's fiscal math. The government's expenditure and capital formation have increased, contributing to the growth. However, private consumption has slowed down. Experts believe that the growth rate is a good sign for the economy, but there are concerns about the impact on certain sectors, particularly agriculture, which has seen a significant decline in nominal growth. The nominal GDP growth of 8% is lower than the 10.1% assumed in the Union Budget, but the absolute nominal GDP value is higher, which should not compromise the budgetary math. As the government prepares for the Union Budget, the first advance estimates provide a crucial insight into the economy's performance. The estimates are based on extrapolations of indicators available up to November and are subject to revision. However, experts predict that the real GDP growth will be closer to 6.5% in FY27, while nominal growth will lift towards 10%."