India’s economic recovery after the Covid-19 shock remains uneven, with growth in the primary and secondary sectors on a continuous decline, while the services sector, despite posting relatively higher numbers, remains stuck in a narrow range with limited upside, official GDP data show. Experts attribute this slowdown to adverse weather effects and low farm prices among others. 

According to the First Advance Estimates of GDP for 2025-26 released by the National Statistics Office (NSO) on Wednesday, growth in the primary sector has weakened further to 2.7% in 2025-26 from 4.4% in the previous year. Agriculture and allied activities are estimated to grow by 3.1%, while mining and quarrying is projected to contract by 0.7%. The data suggests that agriculture and mining have struggled to regain strong momentum since the Covid period, weighed down by uneven output trends and weak performance in extractive industries.

“The slowdown in primary sector has been caused by adverse weather conditions, low farm prices, reduced sowing incentives, declining demand as well as structural constraints and rising fertilizer prices and falling fuel costs, which have squeezed profit margins amid persistent supply disruptions,” Vinay K Srivastava, Professor of Finance at ITS Ghaziabad, told Fortune India.

Services sector continues to lead but no major acceleration

The tertiary sector continues to lead overall growth, but its pace appears largely range-bound. Services are estimated to grow by 9.1% in real terms in 2025-26, broadly similar to last year. Within the sector, financial, real estate and professional services, along with public administration, defence and other services, are projected to grow by 9.9%. However, trade, hotels, transport and communication-related services are estimated to grow at a lower 7.5%, indicating uneven recovery across service segments.

While services remain the backbone of economic expansion, the data shows no major acceleration beyond current levels. Several high-frequency indicators, including transport activity and vehicle sales, point to steady but moderate expansion rather than a sharp rebound.

“The pace of growth slowed due to reduced global/domestic demand following COVID-19 and potential US tariffs on IT exports, jobless growth, skill gap and uncertainty in the gig sector, lack of credit to MSMEs, regulatory pressure and softness in sub-sectors following Covid-19,” Srivastava added. 

However experts remain optimistic about the sector's growth and suggest that it will see more growth in upcoming fiscal years. 

“We are positive on services sector growth as it is more a function of domestic demand. Post the GST cut, there has been a revival in urban demand in Q3 FY26. The sustainability of urban demand will be a function of wage growth, which is showing nascent signs of pickup,” Gaura Sen Gupta, Chief Economist at IDFC FIRST Bank, said.

Secondary sector shows a mixed picture

The secondary sector presents a mixed picture. Manufacturing and construction are estimated to grow at around 7%, while growth in electricity, gas and water supply has slowed to 2.1%, limiting the sector’s ability to offset weakness in agriculture and mining.

GDP to grow by 7.4% in 2025-26

Overall, real GDP is estimated to grow by 7.4% in 2025-26, higher than the 6.5% recorded in 2024-25. However, the sectoral breakup indicates that growth is increasingly reliant on select service segments, with the primary sector lagging and limited upside emerging from the broader services space.