First Advance Estimates of GDP

The Ministry of Statistics and Programme Implementation, has released the First Advance Estimates (FAE) of GDP growth for the fiscal year 2025-26.

Key Highlights

• Projected GDP Growth:
  • Real GDP Growth: 7.4% for 2025-26, up from 6.5% in the previous year.
  • Nominal GDP Growth: 8% for 2025-26 (the lowest in 5 years).
    • Nominal GDP in Rupee Terms: Rs 357 lakh crore (~$3.97 trillion).
• Sector-wise Growth Projections:
  • Manufacturing Sector: Expected to grow at 7%, up from 4.5% in 2024-25.
  • Agriculture Sector: Predicted to grow at 3.1%, a slowdown from 4.6% in the previous year.
  • Mining and Quarrying: Estimated to contract by 0.7%, compared to 2.7% growth in 2024-25.

• • Tertiary Sector (Services): Expected to grow at 9.1%, an increase from 7.2% in FY 2024–25.
• Key Economic Indicators:
  • Private Final Consumption Expenditure (PFCE): Projected to grow at 7%, slightly slower than the 7.2% of 2024-25.
  • Gross Fixed Capital Formation (GFCF): Expected to grow at 7.8%, faster than the 7.1% seen in 2024-25.
  • Government Consumption Expenditure: Expected to grow by 5.2%, up from 2.3% in the previous year, largely due to increased state government spending.

New GDP Series

• Base Year Shift: GDP data from February 2025 onwards will be based on the new series with a 2022-23 base year instead of 2011-12.
• Impact: The shift reflects structural transformation in the Indian economy, offering more accurate insights

What are the First Advance Estimates of GDP?

• The First Advance Estimates (FAE) are early projections of India’s Gross Domestic Product (GDP) growth for a financial year, typically released in the first week of January.
• These estimates are based on available data up to the third quarter (October–December) of the financial year. 
• They don’t include formal data for Q3, which is published later in the Second Advance Estimates (SAE).Significance: The FAE provide an early indication of economic performance, particularly for budget planning. The nominal GDP, which includes the inflation effect, is the actual observed variable, and it guides the government’s budgetary decisions.
• Method of Calculation: The FAE are derived using the Benchmark-Indicator method, where data from the previous year is extrapolated using relevant indicators such as:
  • Index of Industrial Production (IIP) up to October,
  • Retail and wholesale inflation data up to November,
  • Commercial vehicle sales up to September, etc.

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