India's Growth: Fast Numbers, Narrow Foundations, Uneven Impact

• India projects 7.4% real GDP growth for 2025–26, but the narrow gap between real and nominal growth suggests weak price momentum and potential deflationary pressures.
• Nearly three-fourths of incremental Gross Value Added (GVA) comes from the tertiary (services) sector, particularly financial, real estate, and professional services.
• Services-led growth often has weak backward linkages and lower domestic multiplier effects compared to manufacturing or construction, limiting job creation and broad economic transmission.
• High-frequency indicators show moderate momentum, with uneven household demand, subdued fuel consumption, and steady but not exuberant investment.
• The divergence between headline GDP growth and high-frequency indicators suggests growth is less driven by physical production and more by services and public spending, leading to a widening income gap.

Why It Matters: India's high GDP growth is increasingly services-driven, raising concerns about job creation and inclusive economic development.