India’s Q3 GDP At 7.8%; Manufacturing Drives FY26

India’s economy grew 7.8% in the December quarter of FY26. The previous quarter had clocked 8.4%. At first glance, that looks like a loss of speed. But the broader trend still points to steady expansion rather than a sharp turn. Meanwhile, the gap between real and nominal GDP growth has narrowed to about 1% in FY26.

This is the first full year of data under the revised GDP series with 2022-23 as the base year. The earlier base of 2011-12 had begun to look dated for an economy that has changed significantly in scale and structure.

Why Did The December Quarter Show A Softer Print?

The easing in growth was largely linked to agriculture and parts of industry such as mining, electricity, and construction. These sectors did not repeat the strength seen earlier in the year. Even so, growth in both the September and December quarters came in stronger than many had expected at the start of the year.

Gross Value Added (GVA) followed the same direction. It expanded 8.6% in Q2 and then cooled to 7.8% in Q3. A year ago, the same quarter had delivered 7.4%. That comparison suggests the base is not fragile.

There is also a technical layer to the story. For the past two years, GVA growth has exceeded GDP growth, reflecting the effect of net indirect taxes.

What Is Powering The 7.6% Estimate For FY26?

The Second Advance Estimates (SAE) place full-year growth at 7.6%. That is higher than 7.1% in FY25 and 7.2% in FY24. In absolute terms, real GDP is estimated at ₹322.58 lakh crore, compared with ₹299.89 lakh crore in the previous year.

Manufacturing has emerged as a consistent pillar. Output in this segment has expanded in double digits for five straight quarters. Construction activity and the wider secondary sector are growing close to 10%. For the year as a whole, both the secondary and tertiary sectors are projected to expand above 9%, while the primary sector may slow to 2.6%.

On the demand side, private final consumption expenditure is expected to rise 7.7%, up from 5.8% last year. Rural demand has continued to perform, while urban demand, which had weakened, is gradually improving with tax relief measures that were implemented in 2025. Investment and government expenditure also show a positive trend, albeit a slight one.

What Changes Under The New GDP Framework?

The decision to revise the base year to 2022-23 is more than just a statistical exercise. The new data series reflects a broader base for GST data, better representation of smaller and unincorporated enterprises, and the use of double deflation for the agriculture and manufacturing sectors.

The composition of GDP changes slightly under the new data series. The share of private consumption expenditure in GDP is 56.7%, which is less than 61.5% under the earlier data series. However, the share of gross fixed capital formation and government expenditure is higher. The primary sector’s share in GVA rises to 19.8%, while the tertiary sector’s share eases to 54.3%. The secondary sector’s share remains broadly stable.

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A Clearer Reading Of Growth

Quarter-to-quarter numbers will fluctuate. What matters more is the direction of travel. Manufacturing strength, improving consumption, and steady investment suggest that growth is not resting on a single lever. The revised GDP series does not rewrite the story, but it does sharpen the lens through which that story is told.

Sources

Economic Times

Forbes India