India’s Economy to Grow 7.4 % in FY26, ICRA Forecasts
New Delhi, Dec 27 – A recent ICRA report projects that India’s real gross domestic product (GDP) will rise by 7.4 % in fiscal year 2026, up from 6.5 % in FY25. The stronger outlook is driven by a seasonal uptick in the electricity, mining and construction sectors.
Half‑Year Outlook
The analysis indicates that growth is likely to slow to below 7 % in the second half of FY26, after an 8 % rise in the first half. The dip is attributed to an unfavorable base effect and a moderation in exports.
The report also notes that the Reserve Bank of India (RBI) is expected to pause its February 2026 policy review, deferring decisions until after the FY27 Union Budget and as inflation‑growth dynamics evolve.
Quarterly Performance
Economic activity remained robust in Q3 FY26, buoyed by festive demand sparked by lower goods and services tax (GST) rates and seasonal boosts in certain sectors. ICRA expects that lower GST rates and holiday spending helped lift consumption and manufacturing volumes, although export pressure may intensify in the latter half of the year unless a U.S.–India trade deal takes shape.
Inflation and Prices
CPI inflation is forecast to fall sharply to 2 % in FY26, down from 4.6 % in FY25. The wholesale price index (WPI) is projected at 0.4 %. The most recent data show CPI easing to 0.7 % in November 2025 from 0.3 % in October, largely due to a narrower decline in food and beverage prices.
Sectoral Highlights
Mining, construction, and electricity demand are set to pick up seasonally after a period of easing caused by rainfall‑related disruptions. The report projects cement production will grow 6.5–7.5 % in FY26, while steel demand may slow to 7–8 % growth following several strong years. Electricity demand is expected to increase by a modest 1.5–2 % for the fiscal year.
Risks
External risks outlined by ICRA include delays in a U.S.–India trade agreement and changes in global policies that could affect service exports. Domestic risks encompass weaker export growth, monsoon variability, fiscal constraints, and commodity‑price‑driven inflationary pressures.
— IANS
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