Relevance for UPSC: GS III (Indian Economy, Growth, External Sector); Source: The Hindu 

Context

The First Advance Estimates released by the Ministry of Statistics and Programme Implementation project real Gross Domestic Product growth at 7.4 percent in Financial Year 2025–26, compared to about 6.5 percent in the previous year. The projection comes amid global trade uncertainties, especially higher import tariffs imposed by the United States.

Key Highlights

• Real Gross Domestic Product growth: 7.4 percent; nominal growth: around 8 percent.
• Strong performance in the first half of the year:
  • First quarter: 7.8 percent
  • Second quarter: 8.2 percent
• Growth expected to moderate in the second half to about 6.8 percent.
• Private Final Consumption Expenditure projected to grow at around 7 percent, indicating some pressure on household demand.

Conceptual Clarity

• First Advance Estimates are the earliest official annual growth estimates and form the statistical base for Union Budget planning.
• Real growth reflects inflation-adjusted output expansion, while nominal growth includes price effects.

Challenges Highlighted

• Higher United States tariffs affecting labour-intensive exports such as textiles and engineering goods.
• Global trade slowdown and external demand risks.

Policy Significance

The estimates underline India’s macroeconomic resilience, but also the need to strengthen exports, diversify markets, and sustain domestic demand through investment and employment generation.

Q. Consider the following statements:

1. First Advance Estimates are released after the Union Budget.
2. Private Final Consumption Expenditure reflects household demand.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2