India's YoY real GDP growth to slow to 6.1-6.5% in Q1 FY26: ICRA

It expects the country’s index of industrial production (IIP) to have shown a modest growth of 1.5-2.5 per cent in June this year.

The YoY growth in economic activity, as measured by the ICRA business activity monitor, an index of high frequency indicators, eased to a four-month low of 5.9 per cent in June this year from 6.4 per cent in May, led by seven of the 15 constituent indicators, amid excess rainfall in the latter part of the month.

In quarterly terms, the growth in the index eased to 6.7 per cent in the first quarter (Q1) of fiscal 2025-26 (FY26) from 7.7 per cent in Q4 FY25, particularly affected by sluggish auto demand that weighed on output, and rainfall-led slump in mining and electricity, even as trade policy-related uncertainty and geopolitical tensions are also likely to have weighed on overall demand/activity, ICRA said in a release.

Besides, labour market conditions weakened in June in both rural and urban areas relative to May, although financial conditions improved, and core output growth inched up.

In rural India, the labour force participation rate (LFPR) and worker-population ratio (WPR) declined in June compared to May, which along with the dip in the unemployment rate suggests that people dropped out of the labour force. This was likely influenced by seasonal agricultural patterns and a shift of some unpaid helpers towards domestic chores.

Overall, while the all-India WPR eased to 51.2 per cent in June 2025 from 51.7 per cent in May 2025, the unemployment rate remained unchanged at 5.6 per cent.

While the YoY growth in the core sector output improved to 1.7 per cent in June this year from 1.2 per cent in May, it remained tepid, with as many as five of the eight sub-sectors recording a YoY dip in their output in the month.

ALCHEMPro News Desk (DS)