India's economy is expected to grow 7.4% in the fiscal year ending in March, the National Statistics Office said on Wednesday, above the government's initial projection of 6.3%-6.8%.

India's first advance estimate of gross domestic product (GDP), which will undergo revisions over time as data coverage improves, will be used as a base for the federal budget due to be announced on February 1.

The Indian economy grew 6.5% in 2024/25 and 9.2% in 2023/24.

In nominal terms, which factor in inflation, the economy is expected to grow 8%, compared with the 10.1% estimate in the annual federal budget announced last February.

Private consumption, which accounts for about 60% of GDP, was seen expanding by 7% year-on-year compared to a 7.2% expansion last fiscal year.

Government spending is estimated to rise by 5.2% year-on-year in 2025/26, up from a 2.3% increase the previous year, while private investment is seen rising by 7.8%, higher than the 7.1% growth the year before.

Manufacturing, which accounts for about 13% of GDP, is projected to expand 7% year-on-year in 2025/26, compared with 4.5% a year ago, while construction output was seen growing by 7%, down from 9.4% in the previous year, data showed.

Growth in farm output, that employs more than 40% of the workforce, was seen picking up to 3.1% in the current fiscal year from 4.6% a year ago.

(Reporting by Shivangi Acharya and Nikunj Ohri; Editing by Hugh Lawson and Mrigank Dhaniwala)