SYLLABUS

GS-3: Indian Economy and issues relating to planning, mobilisation of resources, growth, development and employment.

Context: Recently, the National Statistics Office (NSO) released the First Advance Estimates of GDP for 2025–26, projecting stronger economic growth driven mainly by the services sector.

More on the News

• The release includes estimates of GDP and Gross Value Added (GVA) at constant and current prices.

• It also covers sector-wise GVA growth, expenditure components of GDP, national income and per capita income.

• The estimates provide an early assessment of economic growth for the full financial year 2025–26 based on data available so far.

• The Second Advance Estimates of GDP for 2025–26 will be released in February 2026.

• Provisional Estimates based on full-year data will be released in May 2026.

• The government is also revising the national accounts base year from 2011–12 to 2022–23, which may lead to further revisions in future estimates.

• Government has formed a 26-member Advisory Committee on National Accounts Statistics (NAS) under the chairmanship of Biswanath Goldar to update the GDP base year from existing 2011-12 to 2022-23.

Key Highlights of the First Advance Estimates 

• Real Gross Domestic Product (GDP): Estimated to grow by 7.4 per cent in 2025–26 compared to 6.5 per cent in 2024–25.

• Gross Domestic Product (GDP) is a monetary measure that represents the total market value of all final goods and services produced within a country during a specific period.

• Nominal GDP: Projected to grow by 8.0 per cent in 2025–26.

• Real Gross Value Added: Estimated to grow by 7.3 per cent in 2025–26.

• Main driver of overall economic growth: Services sector.

Sector-wise Performance

• Tertiary sector: Expected to grow by 9.1 per cent in 2025–26.

• Financial real estate and professional services, along with public administration, defence and other services, are projected to grow by 9.9 per cent.
• Trade, hotels, transport and communication services are estimated to grow by 7.5 per cent.

• Secondary sector: Projected to grow by 7.0 per cent.

• Manufacturing growth is expected to accelerate from 4.5 per cent in 2024–25 to 7.0 per cent in 2025–26.

• Primary sector: Shows moderate growth with agriculture and allied activities growing at 3.1 per cent.

• Mining and quarrying is estimated to contract by 0.7 per cent during the year.

Expenditure-side Trends

• Private Final Consumption Expenditure is estimated to grow by 7.0 per cent in 2025–26.

• Gross Fixed Capital Formation is projected to grow by 7.8 per cent, indicating sustained investment activity.

• Gross fixed capital formation (GFCF) refers to the net increase in fixed assets within an economy, indicating how much of the new value added is invested rather than consumed.

Significance of the First Advance Estimates 

• The estimates provide an early official assessment of India’s economic performance for 2025–26, helping policymakers and analysts gauge growth momentum before the financial year ends.
• They form a critical statistical base for fiscal planning, as key ratios and projections in the Union Budget are derived from the First Advance Estimates.
• The estimates highlight sectoral growth trends, especially the strong performance of services and investment activity, enabling targeted policy interventions.
• They allow comparison with forecasts by institutions such as the Reserve Bank of India, improving transparency and credibility in macroeconomic outlooks.

Source:
The Hindu
PIB