India's economic growth is estimated to surge past most initial private and official forecasts, backed by robust domestic demand and government spending, helping New Delhi cope with punitive US tariffs.

The near $4 trillion economy is expected to grow 7.4 per cent 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 per cent.

Prime Minister Narendra Modi, facing steep US tariffs and an uncertain global backdrop, last year accelerated domestic reforms to support growth, including an overhaul of consumer taxes on hundreds of items and implementation of long-delayed labour reforms.

"(This growth) reflects that despite rising global uncertainties India continued to perform well," Sakshi Gupta, economist at HDFC Bank, said.

The estimate of gross domestic product, which will be revised 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 per cent in 2024/25 and 9.2 per cent in 2023/24.

India has edged past Japan to become the world’s fourth-largest economy, the government said last month. Confirmation by the International Monetary Fund is due.

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

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

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

The United States has imposed 50 per cent tariffs on some of India's key exports to punish it for its purchases of Russian oil.

However, the strong growth estimate is possibly due to a limited hit on India’s exports so far, helping steady manufacturing growth, said Madhavi Arora, economist at Emkay Global.

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

The output of farms, which employ more than 40 per cent of India's workforce, was estimated to expand 3.1 per cent in the current fiscal year from 4.6 per cent a year ago.