India’s economy may grow faster than previously estimated this fiscal year as the government unveiled a new framework for calculating output, highlighting the world’s most populous country’s resilience to global trade disruptions.
On Friday, the government will shift the GDP base year from 2011-12 to 2022-23 and publish advance estimates for the fiscal year ending March 31, 2026. The updated estimate pegs India’s GDP growth at 7.6% in fiscal 2026, according to the average estimate of 14 economists surveyed by Bloomberg. This compares with the government’s first advance GDP estimate of 7.4% in January under the previous series.
The GDP overhaul is part of a broader effort to update India’s economic data. Earlier this month, the government revised its inflation series to better capture changing spending patterns in the world’s fastest-growing major economy. Recalibrating growth adjusts the weights given to sectors to reflect how the economy has developed over the past decade. Fast-growing sectors such as the digital economy and gig work are likely to gain prominence in the new series, while sectors including agriculture and informal manufacturing may be underweight.
“The new GDP series will be important in determining the future course of policy actions,” said Teresa John, economist at Nirmal Bang Securities. Although there is scope for the Reserve Bank of India to remain growth-supportive, “much will depend on the policy conclusions drawn from the new GDP series”.
Economists will also look to the new calculation method for indications of when India might overtake Japan as the world’s fourth-largest economy. Japan’s economy is worth about $4.4 trillion, and India has yet to overtake it due to the rupee’s sharp decline against the dollar last year, although the revised series could add significantly to GDP.
A similar revision in 2015 increased India’s GDP by about $120 billion and the projected growth rate for 2013–14 from 4.7% to 6.9%.
Despite trade tensions with the US for most of the last year, the Indian government remains optimistic about the growth outlook for the current and next fiscal year. The two countries agreed to a trade deal earlier this month that senior officials have said could further boost growth estimates. However, the outlook for those trade terms is now uncertain after the Supreme Court ruled against the Trump administration’s tariffs.
To protect the economy from trade disruptions, the government carried out sweeping reforms last year, including a sweeping overhaul of consumption taxes. Friday’s data will also provide the first full-quarter snapshot covering the October to December period after those tax cuts.
According to the average of 34 economists in a Bloomberg survey, the October to December quarter may see growth of 7.6% under the new base year.
Radhika Piplani, economist at Motilal Oswal Financial Services Ltd., expects the data to “positively surprise consensus growth expectations.” They expect expansion to reach 8.5% this quarter, compared with 8.2% in the July-to-September period.
