EY revises India's FY26 GDP growth forecast to 6.7% from 6.5%

The Q1 FY26 real GDP growth figure was a five-quarter high compared to 7.4 per cent in Q4 FY25.

In August 2025, India’s manufacturing purchasing managers’ index (PMI) increased to 59.3, its highest level since February 2008.

Consumer price index (CPI)-based inflation increased from 1.6 per cent in July 2025 to 2.1 per cent in August, whereas core CPI inflation rose from 4.2 per cent to 4.3 per cent during the same period.

The government’s total expenditure grew by 20.2 per cent in April-July FY26, with growth in revenue expenditure at 17.1 per cent and that in capital expenditure at 32.8 per cent, EY said in its 'Economy Watch' report for September 2025.

Its fiscal and revenue deficits during the four-month period stood at 29.9 per cent and 28.9 per cent of their respective annual budget estimates.

Gross bank credit growth improved marginally to 10 per cent in July this year from 9.5 per cent in June.

Net foreign direct investment and foreign portfolio investment inflows increased to $1.1 billion and $2.4 billion respectively in June 2025.

Merchandise exports continued to show positive growth, although at a slow pace of 6.7 per cent in August 2025 even as merchandise imports contracted by 10.1 per cent, attributable mainly to a large base effect.

The report noted that the base of India’s export destinations and import sources is ‘narrow’.

The ongoing tariff-related uncertainties and supply chain disruptions offer scope to India to re-examine the pattern and composition of its trade with the rest of the world, especially with the United States and China, the EY report added.

ALCHEMPro News Desk (DS)