Indian economy grew faster than RBI’s estimate: GDP growth in the first quarter was 7.8%; Impact of growth in IT-real estate sectors

Question: What was India’s GDP and GVA growth in the first quarter (Q1)?

answer: According to Ministry of Statistics and Program Implementation (MoSPI) data, real GDP grew by 7.8% to ₹81.36 lakh crore. A year ago it was ₹75.46 lakh crore. Whereas real GVA increased by 8.2% to ₹73.82 lakh crore.

nominal GDP increased by 10.3% to ₹88.27 lakh crore. Last year it was ₹80 lakh crore. Nominal GVA grew by 11.5% to reach ₹80.53 lakh crore.

Question: Why is this figure important amid increased inflation due to West Asia war?

answer: Due to the war in West Asia, the prices of crude oil and gas have increased rapidly in the international market and the global supply chain has been affected. Due to this, inflation has increased in India.

Generally, high energy prices and inflation slow down economic activity, but the Indian economy achieved a growth of 7.8% despite this pressure.

Question: Has there been any change in the calculation methodology of GDP?

answer: Yes, the Ministry had implemented the new series in February 2026 considering 2022-23 as the new base year. In this, ‘double deflation approach’ has been adopted for the GVA of the manufacturing sector.

Under this, the prices of output and inputs (raw materials) are adjusted with different Producer Price Index (PPI), thereby revealing the true value-added position of manufacturing.

Question: What does this GDP data mean for the common citizen and the industry?

answer: Amid global uncertainties, growth of 7.8% indicates that both domestic demand and investment are strong. The growth of 13.9% and 15.9% in passenger vehicle and household vehicle registrations respectively indicates that both the purchasing power and confidence of the common consumer remains intact.

Question: When will the next GDP figures be released?

answer: According to the government calendar, the GDP data for the second quarter (July-September) of the current financial year 2026-27 will be released on November 30, 2026.

Question: What do the RBI estimates for the full year (FY27) say?

answer: According to RBI estimates released on August 5, India’s GDP growth rate is estimated to be 6.7% for the entire financial year 2026-27. However, after better than expected figures in the first quarter, there may be a possibility of review in this also.

Question: What is the expected pace of growth in the coming quarters?

answer: A slight softening in the growth rate may be seen going forward…

Question: What could be the impact of rising inflation and war on the economy?

answer: First quarter data is strong, but if the crisis in West Asia drags on, higher crude prices could increase costs. This may impact the margins of companies and consumer spending, due to which growth is estimated to be between 6.4% to 6.8% in the coming quarters.

Data released with new base year 2022-23

The Statistics Ministry has presented the full year GDP data for the financial year 2025-26 with a new change. This time the data of the entire year has been released after calculating it on the scale of the new base year 2022-23.

Servants, drivers and e-vehicle data also included

In the new series of GDP, 2022-23 has been made the base year. To make economic projections more accurate, it now also includes data related to GST network, e-vehicle database and services of home-based cooks, drivers and domestic servants.

Base-year is usually changed every 5 years

The base year is changed from time to time to capture major changes in the economy over time. Usually the ministry updates the data series every five years, but this work was delayed due to the Covid pandemic and implementation of GST.

New data till 1950 will come by December 2026

The government will not only release new figures, but will also recalculate the old figures according to the new base year. The ministry has indicated that ‘back-series’ data (data up to 1950-51) under this new framework is expected by December 2026.

New measurements will increase accuracy; Standards should be changed every 5 to 10 years

Why was the method of measuring GDP changed?

The 2011-12 scale was 14 years old. At that time, things like UPI, Zomato, OTT, gig economy did not exist. That’s why this was necessary. Why was 2022-23 chosen as the base year? This year was ‘normal’. Corona was over. The economy was stable. Digital India had been established. The base year is always chosen when there is neither much rise nor fall.

What effect will this have on the common man?

There is no direct impact on the pocket, but with correct data the government will make better policies. Money will be invested in the right place and foreign investment will also increase, the benefits of which will gradually reach the common citizen. Were the figures changed or something hidden? No. It is natural that measurements change when measured using a new scale. America, Britain, China all do this. Changing figures is a sign of accuracy.

​At what frequency should it be changed?

According to international standards, it should be changed every 5 to 10 years. It was fixed for 5 years in the country, but got delayed due to demonetization and GST in 2017-18. After this Covid came, so did it now.

Knowledge Part: What is base year?

Base year is the year in which today’s economic progress is measured considering the prices as ‘fix’. It helps show the ‘real’ growth of the country by removing the effect of inflation.

Example: If in 2011 a pen was worth Rs 5 and today it is worth Rs 10. If we are making 100 pens even today, the GDP as of 2011 will be Rs 500.

As per today it will be Rs 1000. Base year helps us understand whether we are making more pens or simply pens have become expensive.

Why is the base year changed?

The base year is changed to include changes in the market over time, new technologies and new methods of consumption in the calculation of GDP, so that accurate and correct figures of economic development can be obtained.

What is GVA?

Gross Value Added (GVA) shows the total production and value added in major sectors of the economy (such as agriculture, industry and services). This is a pure measure of GDP that excludes taxes and subsidies.

GDP tells the health of the economy

GDP means how much value of goods were produced and how many services were provided within the country in a given time. It can also be called the ‘report card’ of the economic health of the country. In this, not only the production of Indian companies but also the production of foreign companies working in the country is included.

Two types of GDP: real and nominal

Real GDP: In this, the price of goods and services is decided from the base. Till now its year was 2011-12. This shows whether production in the country has really increased or not.

Nominal GDP: It is based on the current market price. Inflation is also included in this. If the prices of goods are increasing, then the nominal GDP will also appear to be increasing.

How is GDP calculated?

A special formula is used to calculate GDP:

$GDP = C + G + I + NX$

C (Consumption): That is what we and you spend on our needs.

G (Government): Expenditure made by the government on the development and facilities of the country.

I (Investment): Investment made by companies to expand their business.

NX (Net Exports): Subtracting goods purchased from goods sold to other countries.

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