As per the dataset on the new 2022-23 series released by the National Statistical Office (NSO), India’s real GDP growth is estimated to have eased to 7.8% in Q3 FY2026 from 8.4% in Q2 FY2026, although both numbers are healthier than our expectations. The moderation was expectedly driven by the agriculture and the non-manufacturing industrial sectors. The rebasing of the GDP series has led to a reduction in the size of the Indian economy, led by services, even as real GDP growth rates for FY2025-26 have witnessed upward adjustments. With the paring in nominal GDP for FY2023-26, the fiscal deficit-to-GDP ratios are now 15-20 bps higher on an average for this period, compared to the previous estimates. Besides, this would also have a bearing on the Government of India’s (GoI) debt consolidation roadmap, with its debt-to-GDP ratio being higher than previously estimated. ICRA currently projects GDP growth (as per base year 2022-23) at a healthy 7.1% in FY2027, with a likelihood of a prolonged pause on the policy rate.

EXHIBIT: Change in size of GDP, GVA and sub-sectors of GVA in FY2024 - at current prices

FRP: Financial, real estate and professional services; Source: NSO; CEIC; ICRA Research