India’s Economic Growth Slows to 7.8% but Remains Fastest Among Major Economies

Summary:

India’s economic growth slowed to 7.8% in the October-December quarter from 8.4% in the previous quarter, but it continues to lead major global economies. Strong private consumption and manufacturing growth helped offset slower government spending and farm output.

Key Points:

• GDP growth slowed to 7.8% in October-December quarter.
• Previous quarter recorded 8.4% growth.
• Full-year growth projected at 7.6% for 2025/26.
• Private consumption expanded by 8.7%.
• Manufacturing grew 13.3% year-on-year.
• Farm output growth slowed to 1.4%.
• India expected to surpass $4 trillion economy next fiscal year.

Detailed Article:

India’s economic growth moderated to 7.8% year-on-year in the October-December quarter under a revised data series, down from 8.4% in the previous quarter. Despite the slowdown, India remains the fastest-growing major economy globally.

According to the National Statistics Office, the economy is projected to grow 7.6% in the financial year ending March 2026, slightly higher than earlier estimates under the old data series. Growth for 2026/27 has been revised to a range of 7%–7.4%, compared to previous projections of 6.8%–7.2%.

Chief Economic Adviser V Anantha Nageswaran said India is expected to cross the $4 trillion mark in the next financial year.

Private consumption remained a key driver, expanding by 8.7% in the October-December period, compared to 8% in the prior quarter. Manufacturing grew 13.3%, while financial services and hospitality sectors remained resilient.

However, government spending growth slowed to 4.7% from 6.6% in the previous quarter, and private investment eased to 7.8% from 8.4%. Farm output growth also declined to 1.4%, affecting a sector that employs over 40% of India’s workforce.

India’s economy has faced headwinds from global trade tensions and tariff uncertainties. An interim trade understanding with the United States reduced effective tariffs, though negotiations continue.

The Reserve Bank of India has kept its key interest rate unchanged, with analysts suggesting inflation pressures may influence future policy decisions.

India has also introduced major revisions to its statistical framework, incorporating broader data sources such as GST filings and corporate returns to improve GDP measurement accuracy. The overhaul aims to address previous concerns raised by the International Monetary Fund regarding the country’s national accounting methods.

Despite global economic challenges, India’s growth trajectory continues to outpace most major economies.