🌑Knowledge Drop – 86: Despite US Tariffs, India’s GDP Growth Pegged at 7.4% in 2025–26
🔗 This Knowledge Drop has a Mains-focused companion on iasmonk.com
“For answer-writing enrichment beyond Prelims, visit iasmonk.com.”
For prelims: In-depth UPSC Level MCQs; Booster Notes; 20 Word-Flash Facts | You are very much here! For Mains: All G.S Papers: High Quality Essays ; Model Answers; Case Studies and beyond … Visit: iasmonk.com
🧠 Knowledge Drop–86
Despite US Tariffs, India’s GDP Growth Pegged at 7.4% in 2025–26
Post Date: 8 January 2026
Syllabus: GS Paper III | Indian Economy
Theme: GDP Growth × Sectoral GVA × Global Trade Headwinds
📍 Context
India’s economy is estimated to grow by 7.4% in 2025–26, according to the First Advance Estimates released by the National Statistics Office. This marks a two-year high, exceeding last year’s 6.5%, and comes despite steep US tariffs, geopolitical tensions, and a challenging global environment.
📊 Key Highlights (First Advance Estimates)
1)India retains its position as the fastest-growing major economy.
2)Growth momentum is driven primarily by services and manufacturing.
3)The estimates are provisional and will be revised as more data becomes available.
4)The Second Advance Estimates are scheduled for release on 27 February.
🏭 Sectoral Growth Snapshot (GVA at 2011–12 Prices)
Services Sector
1)Accounts for nearly 60% of GDP.
2)Estimated to grow by 9.1% in 2025–26, up from 7.2% last year.
3)Acts as the principal engine cushioning external shocks.
Manufacturing
1)Projected growth of 7% in 2025–26, up from 4.5% in the previous year.
2)Reflects resilience despite global trade frictions and tariff pressures.
Construction
1)Growth moderates to 7%, compared with 9.4% in 2024–25.
2)Still remains a strong employment-generating sector.
Agriculture and Allied Activities
1)Estimated growth of 3.1%, slower than last year’s 4.6%.
2)Continues to provide stability but shows signs of moderation.
Mining and Quarrying
1)Expected to contract by 0.7%, compared with 2.7% growth last year.
2)Represents a drag on overall industrial growth.
💰 Nominal GDP and Demand-Side Drivers
1)Nominal GDP growth is estimated at 8%, accounting for inflation.
2)Government consumption shows real growth of 5.2%, supporting demand.
3)Exports remain resilient with 6.4% growth, despite global uncertainties.
4)Private consumption growth at 7% reflects softer rural demand.
5)Per-capita consumption is estimated to grow by 6.1%.
🌍 Global Headwinds, Domestic Cushion
Despite US tariff hikes on Indian imports and ongoing geopolitical tensions, India’s growth trajectory has been supported by:
1)Policy reforms and GST rationalisation.
2)Strong domestic demand, especially in services.
3)Public expenditure acting as a counter-cyclical stabiliser.
🧭 Policy Significance
1)The growth estimate strengthens fiscal planning ahead of the Union Budget.
2)It provides policymakers room to manage trade headwinds and external shocks.
3)Reinforces confidence in India’s macroeconomic fundamentals.
🪔 IAS Monk Whisper
“When global winds turn adverse, economies anchored in domestic demand and services learn to sail, not stall.”
Target IAS-2026+: Highly Expected Prelims MCQs :
📌 Prelims Practice MCQs
Topic:
MCQ 1 | TYPE 1 — How Many Statements Are Correct?
Consider the following statements regarding India’s GDP growth in 2025–26:
1)India’s GDP growth is estimated at 7.4% in the First Advance Estimates.
2)The estimates are released by the National Statistics Office.
3)These estimates are final and not subject to revision.
How many of the above statements are correct?
A)Only one
B)Only two
C)All three
D)None
🌀 Didn’t get it? Click here (▸) for the Correct Answer & Explanation.
🟩 Correct Answer: B) Only two
🧠 Explanation:
1)✅ True – GDP growth is pegged at 7.4%.
2)✅ True – NSO releases the First Advance Estimates.
3)❌ False – These estimates are provisional and revised later.
MCQ 2 | TYPE 2 — Two-Statement Type
Consider the following statements:
Statement I: The services sector is expected to be the main driver of India’s economic growth in 2025–26.
Statement II: The services sector accounts for nearly 60% of India’s GDP.
Which of the statements given above is/are correct?
A)Only Statement I is correct
B)Only Statement II is correct
C)Both Statement I and Statement II are correct
D)Neither Statement I nor Statement II is correct
🌀 Didn’t get it? Click here (▸) for the Correct Answer & Explanation.
🟩 Correct Answer: C)Both Statement I and Statement II are correct
🧠 Explanation:
Statement I ✅ True – Services are projected to grow at 9.1%.
Statement II ✅ True – Services dominate India’s GDP structure.
MCQ 3 | TYPE 3 — Code-Based Statement Selection
Which of the following sectors are expected to show growth moderation or contraction in 2025–26?
1)Agriculture and allied activities
2)Construction
3)Mining and quarrying
Select the correct answer using the code given below:
A)1 and 3 only
B)2 and 3 only
C)1 and 2 only
D)1, 2 and 3
🌀 Didn’t get it? Click here (▸) for the Correct Answer & Explanation.
🟩 Correct Answer: D)1, 2 and 3
🧠 Explanation:
1)✅ Agriculture growth moderates to 3.1%.
2)✅ Construction growth slows from 9.4% to 7%.
3)✅ Mining contracts by 0.7%.
MCQ 4 | TYPE 4 — Direct Factual Question
Which one of the following is the scheduled date for the release of India’s Second Advance Estimates of GDP for 2025–26?
A)1 February
B)15 February
C)27 February
D)31 March
🌀 Didn’t get it? Click here (▸) for the Correct Answer & Explanation.
🟩 Correct Answer: C)27 February
🧠 Explanation:
The NSO releases the Second Advance Estimates on 27 February.
MCQ 5 | TYPE 5 — UPSC 2025 Linkage Reasoning Format (I, II, III)
Consider the following statements:
Statement I:
India is projected to remain the fastest-growing major economy in 2025–26 despite external trade headwinds.
Statement II:
Strong growth in the services sector and sustained government consumption have supported aggregate demand.
Statement III:
Exports and private consumption have completely offset the slowdown in agriculture and mining.
Which one of the following is correct?
A)Both Statements II and III are correct and both explain Statement I
B)Both Statements II and III are correct but only one explains Statement I
C)Only one of the Statements II and III is correct and that explains Statement I
D)Neither Statement II nor Statement III is correct
🌀 Didn’t get it? Click here (▸) for the Correct Answer & Explanation.
🟩 Correct Answer: C)Only one of the Statements II and III is correct and that explains Statement I
🧠 Explanation:
Statement I is correct – India remains the fastest-growing major economy.
Statement II ✅ Correct – Services growth and government consumption cushion external shocks.
Statement III ❌ Incorrect – Agriculture and mining slowdowns are only partially offset, not fully neutralised.
📘 Knowledge Drop–86
Prelims Booster Notes (1-Page | Copy-Safe)
Topic: India’s GDP Growth in 2025–26
GS: Paper III | Indian Economy 📊🇮🇳
1) What are First Advance Estimates? 🧮
1)First Advance Estimates (FAE) are the earliest official GDP projections for a financial year.
2)They are prepared using partial data and trends available up to that point.
3)They are used as a key input for Union Budget preparation.
4)They are provisional and revised later through Second Advance Estimates and Provisional Estimates.
2) Headline Growth Projection 🚀
1)India’s GDP growth for 2025–26 is estimated at 7.4%.
2)This is a two-year high and higher than last year’s 6.5%.
3)India retains the tag of the fastest-growing major economy.
4)Growth comes despite US tariff hikes and global geopolitical tensions.
3) Sectoral Growth Drivers (GVA at 2011–12 Prices) 🏭🌾
Services Sector
1)Accounts for nearly 60% of India’s GDP.
2)Estimated to grow by 9.1%, up from 7.2% last year.
3)Acts as the main shock-absorber against global headwinds.
Manufacturing
1)Expected to grow by 7%, up from 4.5% last year.
2)Shows resilience despite trade tensions and tariffs.
Construction
1)Growth moderates to 7% from 9.4% earlier.
2)Remains crucial for employment and infrastructure creation.
Agriculture and Allied Activities
1)Estimated to grow by 3.1%, lower than last year’s 4.6%.
2)Moderation affects rural demand and private consumption.
Mining and Quarrying
1)Expected to contract by 0.7%.
2)Acts as a drag on overall industrial performance.
4) Nominal GDP and Demand-Side Trends 💰
1)Nominal GDP growth is estimated at 8% in 2025–26.
2)Government consumption shows real growth of 5.2%, supporting aggregate demand.
3)Exports grow by 6.4%, showing resilience amid global uncertainty.
4)Private consumption grows by 7%, slightly subdued due to agricultural slowdown.
5)Per-capita consumption registers growth of 6.1%.
5) Role of Government Policy 🏛️
1)GST rationalisation and reforms have cushioned trade shocks.
2)Public expenditure has played a counter-cyclical role.
3)Policy support helped insulate domestic growth from external tariffs.
6) Statistical Process & Timeline 🗓️
1)FAE will be revised as more data becomes available.
2)Base-year revisions are part of the ongoing statistical revamp.
3)Second Advance Estimates will be released on 27 February by the National Statistics Office.
🔑 High-Value Prelims Takeaways 🧠
1)FAE are provisional but critical for fiscal planning.
2)Services remain India’s primary growth engine.
3)Government consumption cushions external shocks.
4)Agriculture and mining show relative weakness.
5)India’s growth resilience persists despite global trade pressures.
⚡ Knowledge Drop–86
20 Flash Words (Prelims)
1)GDP growth 7.4% 📈
2)First Advance Estimates
3)National Statistics Office 🇮🇳
4)Fastest growing major economy
5)US tariff impact
6)Global trade headwinds
7)Services sector dominance 🧩
8)Services growth 9.1%
9)Manufacturing growth 7% 🏭
10)Construction moderation
11)Agriculture growth 3.1% 🌾
12)Mining contraction
13)Nominal GDP 8%
14)Government consumption support 🏛️
15)Private consumption slowdown
16)Export growth resilience
17)Per capita consumption
18)Counter-cyclical fiscal role
19)Budget preparation input
20)Second Advance Estimates Feb 27 📅