Economic Growth May exceed 7%, GDP to Cross $4 Trillion Mark in FY26: CEA

Buoyed by more-than-expected 8.2 per cent GDP growth rate in the second quarter, Chief Economic Adviser V Anantha Nageswaran on Friday expressed optimism that India's economic growth will exceed 7 per cent this fiscal and the size of the GDP will cross the USD 4 trillion mark.

The Economic Survey tabled in Parliament in January had projected real economic growth of 6.3-6.8 per cent for FY26.

Briefing reporters after the release of the second-quarter GDP growth, Nageswaran said the Indian economy is expected to cross USD 4 trillion in the current fiscal year, given the current rate of growth.

India's Gross Domestic Product (GDP), an indicator of the size of the economy, stood at USD 3.9 trillion at the end of March this year, he added.

Nageswaran further said, "The first half of the financial year has recorded a real GDP growth rate of 8 per cent. Now we can state comfortably that the full year growth will be either 7 per cent or to the north of that, rather than to the south of that. We are now saying the growth rate will be at least 7 per cent for the full year.

The Indian economy grew by a higher-than-expected 8.2 per cent -- a six-quarter high -- as increased factory production in anticipation of a consumption boost from the GST rate cut helped offset deceleration in farm output.

The growth in the second quarter, compared with 7.8 per cent in the preceding three months and 5.6 per cent in the year-ago period, was aided by a strong showing from the services sector, which clocked double-digit growth.

Improving price dynamics and tax reforms are expected to boost household disposable incomes, strengthening the near-term consumption outlook, he added.

The third quarter (October-December) of the current fiscal year has commenced on a sound footing, the CEA pointed out.

The cumulative GST collection growth of 9 per cent for April–October 2025 indicates that the underlying revenue stream has remained resilient, aided by firm consumption and improved compliance.

Healthy corporate sector balance sheets augur well for sustained private investments in H2 of FY26, he said.

Nageswaran further said that the rural demand remains resilient while urban demand is gaining traction post-GST rate cut.

Rural consumption continued to strengthen, driven by favourable agricultural incomes on the back of healthy crop output, he said.

In October 2025, tractor sales reached the highest level for any month in the past eleven years, supported by favourable monsoon conditions, improved rural sentiment, festive demand and the recent GST rate reduction, he said, adding retail sales of two and three-wheeler vehicles recorded the highest growth in October.

On the price situation, he said, core inflation remains stable, while timely Rabi sowing and healthy reservoir levels reinforce a benign food supply outlook.

Ongoing structural reforms, including implementation of Labour Codes, GST rate rationalisation, new Personal Income Tax regime and deregulation initiatives, continue to enhance efficiency and competitiveness, he said.

Growth momentum is firming, driven by robust expansion in manufacturing and services, supported by festive demand and GST-led gains.

"The confluence of stable inflation, sustained public capex, and reform momentum positions the economy to navigate risks, as reflected in upward revisions to FY26 GDP growth projections by various agencies," he said. PTI DP DP MR