India's economy likely grew at 7.4% during October-December, moderating from a six-quarter high of 8.2% in the previous three-month period, due to government spending cuts and weak exports, according to a Mint poll of 18 economists.
Festive demand and GST rate cuts, however, helped sustain strong growth momentum, they said.
The economists projected India's gross domestic product (GDP) to expand at 7.5% in FY26, slightly higher than the Reserve Bank of India’s estimate of 7.3%. This is also higher than the 7.4% first advance estimate released by the statistics ministry in January.
The growth estimates for the October-December quarter (Q3), in a range of 7.0%-8.1%, are based on old GDP series, with base year 2011-12. The data, due out on 27 February, will see updated GDP series with base year shifting to 2022-23. The move could lead to an overhaul of GDP calculations, raising the possibility of divergence from official growth figures for technical reasons, the economists polled by Mint said.
“The reasons for the estimated sequential slowdown include an unfavourable base effect, contraction in government capital spending, subdued state government revenue expenditure, and weak merchandise exports,” said Aditi Nayar, chief economist at Icra Ltd. In the same quarter last year, GDP growth had jumped to 6.4% from 5.6% the previous quarter.
“Nevertheless, healthy demand during the festive season, boosted by GST rationalisation, likely kept the pace of growth above 7%," she added.
Economists expect agriculture growth to have held steady, while services remained robust despite some normalisation in momentum.
Manufacturing activity likely strengthened due to GST cuts, even as electricity output softened and construction growth moderated.
While GDP growth momentum is expected to be strong, low tax collections due to cuts in income tax and GST, and high subsidy payout could hurt growth in gross value addition (GVA). GDP is calculated by adding net tax (taxes minus subsidies) to GVA.
“We expect GDP growth to underperform GVA growth as net indirect taxes will be impacted by GST rationalisation weighing on tax growth,” said Yuvika Singhal, economist at QuantEco.
Among several updates, the use of deflators—the method used to estimate real GDP growth after stripping off the impact of inflation from economic activity at current prices—will be closely watched. In the first half of the year, low inflation along with statistical limitations, had led to a narrow gap in nominal (current prices) and real GDP growth rates.
Real GDP growth stood at 8.0% in H1 (April-September 2025), while nominal GDP growth was only 80 basis points (bps) higher at 8.8%, suggesting ultra-low deflator. According to a Reuters report, the statistics ministry will adopt a more granular price deflation approach by using about 500–600 items from the new consumer and wholesale price indices to address concerns raised by economists.
“Ideally, if the new series does indeed incorporate all the changes as mentioned by the statistics ministry, the growth rate ought to be lower,” said Kunal Kundu, economist at Societe Generale. “But that is also dependent on whether they use a new producer price index (PPI) series to deflate the GDP or continue to use the old method of deflation.”