India's GDP Growth Accelerates to 7.2% in Q3, Exceeds All Estimates

India's gross domestic product grew at 7.2% in the October-December quarter of 2025-26, significantly exceeding the RBI's estimate of 6.5% and surprising economists who had expected a slowdown due to global headwinds. The data, released by the Ministry of Statistics on Friday, showed that the manufacturing sector was the star performer with 11.4% growth, while services grew at a robust 7.8%.

Sectoral Performance

The manufacturing rebound was driven by strong export demand and the PLI scheme boosting domestic production in electronics, textiles, and pharmaceuticals. Construction activity remained buoyant at 9.2% growth, fueled by government infrastructure spending and a residential real estate boom in tier-2 and tier-3 cities.

Agriculture growth moderated to 3.5% compared to 5.7% in the same quarter last year, affected by uneven monsoon distribution. However, government support through higher MSPs and PM-KISAN transfers helped maintain rural demand. Private consumption expenditure grew at 6.8%, indicating broad-based economic recovery.

"India is the fastest-growing major economy and will likely retain this position for the foreseeable future. The combination of demographic dividend, digital infrastructure, and policy reforms is creating a virtuous growth cycle," said the Chief Economic Advisor.

The strong GDP print is expected to prompt international agencies to revise their full-year growth forecasts upward. The IMF currently projects India to grow at 6.8% for FY26, but the Q3 data suggests the actual figure could be closer to 7%. The data also strengthens the government's fiscal position, with higher growth translating to better-than-expected tax revenues.