NEW DELHI, June 6: India’s economy delivered a stronger-than-expected performance in the fourth quarter of FY26, helping annual GDP growth accelerate to 7.7 per cent and reinforcing the country’s position as the world’s fastest-growing major economy, according to a report by SBI Research on Saturday.
The latest Ecowrap report said the economy expanded by 7.8 per cent in the January-March quarter of FY26, up from 7 per cent in the corresponding period of the previous year. The robust fourth-quarter performance lifted full-year GDP growth to 7.7 per cent from 7.1 per cent in FY25.
Gross Value Added (GVA), a key measure of economic activity, grew by 7.9 per cent in both Q4 and the full fiscal year, while core GVA expanded by a strong 9.7 per cent during FY26.
The report highlighted broad-based growth across sectors, led by services and industry. The services sector grew 9.9 per cent in the fourth quarter, supported by a sharp 12.5 per cent rise in trade, hotels, transport, communication and broadcasting-related services. Financial, real estate and professional services also remained resilient, recording growth of 10.4 per cent.
Within industry, construction activity expanded by 8.4 per cent in Q4, while manufacturing registered growth of 7.3 per cent. For the full year, manufacturing emerged as one of the strongest performers with growth of 10.7 per cent. Agriculture, despite some moderation, posted growth of 3.6 per cent in the final quarter.
According to SBI Research, the latest high-frequency indicators for April and May point to above-average acceleration in economic activity, raising the possibility that growth in the first quarter of FY27 could surpass the Reserve Bank of India’s estimate of 6.6 per cent.
The report attributed part of the stronger growth performance to improvements in the new GDP series, which better captures the contribution of India’s informal economy through datasets such as the Annual Survey of Unincorporated Sector Enterprises (ASUSE) and the Periodic Labour Force Survey (PLFS).
It noted that nearly 7.9 crore enterprises are now registered under ASUSE, contributing around 12 per cent of overall GVA. Increased formalisation, digitisation and improved access to institutional credit have enhanced productivity and strengthened economic activity, it said.
On the investment front, SBI Research pointed to a significant revival in private sector capital expenditure. Private investment announcements surged to Rs 56 lakh crore in FY26 from Rs 37 lakh crore in the previous year, while total investment announcements reached a record Rs 80 lakh crore.
The report said the manufacturing sector accounted for nearly 29 per cent of fresh investment announcements, closely followed by the power sector and building infrastructure projects.
Corporate earnings also reflected the improving economic environment. Around 4,500 listed companies reported revenue growth of 10.3 per cent in the fourth quarter, while profit after tax rose by 26 per cent among non-BFSI companies despite some pressure on operating margins.
SBI Research said India’s strong macroeconomic fundamentals, resilient financial sector and sustained policy focus on formalisation, infrastructure creation and productivity enhancement would help the economy weather global uncertainties and maintain its growth trajectory in FY27.
The report also observed that stronger economic activity and a possible rise in the GDP deflator could push nominal GDP growth to 12.5-13 per cent in FY27, significantly higher than the budget estimate of 10 per cent.
(UNI)
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