New Delhi, June 11 -- Estimates of gross domestic product (GDP) released last week for 2025-26 have created a sense of euphoria over India's 7.7% expansion. While this is marginally higher than expected, the data must be seen in the larger context of structural bottlenecks in the economy and the challenges it is likely to face in the coming months.

First, GDP growth partly appears better because of the low prices that prevailed during the year. Nominal GDP growth for 2025-26 was only 8.9% and has steadily declined from 11.6% in 2023-24.

The acceleration in real growth despite a deceleration in nominal growth is largely a result of benign inflation. For 2025-26, the GDP deflator for prices was 1.2%, the lowest in recent years, which make...