ICRA forecasts 7.5% GDP expansion in India in FY26

The consumption volumes of goods and services as well as the manufacturing volume growth is likely to have witnessed an uptick owing to a boost to demand in Q3 FY26 led by the goods and services tax (GST) rate cuts and the festive season.

However, 10 indicators saw a deterioration, partly due to unseasonal rains in October and steep US tariffs, it said.

The data for November and early-December has showed signs of recovery across some segments.

Nevertheless, an unfavourable base is expected to temper the pace of gross domestic product (GDP) growth in Q3 FY26 from 8 per cent in the first half (H1) of the fiscal.

Overall, ICRA forecasts the GDP expansion to print at 7.4 per cent in FY26; it expanded by 6.5 per cent in FY25.

With a projected softening in the consumer price inflation to 2 per cent and whole price inflation to 0.4 per cent in FY26 vis-a-vis FY25, nominal GDP growth is expected to moderate to 8.5 per cent in FY26 from 9.8 per cent in FY25, in contrast with the uptrend expected in real GDP growth.

ICRA currently expects a pause in the central bank monetary policy committee’s February 2026 policy review.

ALCHEMPro News Desk (DS)