ICRA estimates India's GDP growth at four-quarter low of 7 per cent in April-June

India's GDP growth is projected to reach a four-quarter low of 7 percent in the April-June quarter of the current fiscal year, according to rating agency ICRA. This decline is observed from the 7.8 percent growth recorded in the March quarter of fiscal year 2026. The slowdown is primarily attributed to the services sector's contraction, which is expected to expand at 7.9 percent, while the industrial sector is projected to grow at 7.7 percent, and agriculture at 4 percent in the June quarter.

For the entire fiscal year 2026-27, ICRA forecasts GDP growth to moderate to 6.7 percent, down from 7.7 percent in fiscal year 2025-26. ICRA Chief Economist Aditi Nayar stated that high-frequency indicators indicated a robust domestic volume growth in the June quarter of 2026-27, despite concerns over the impact of higher commodity prices resulting from the West Asia conflict.

Notably, the projected real GDP expansion in the first quarter of 2026-27 is expected to ease to 7 percent from 7.8 percent in the last quarter of 2025-26, aligning with the Monetary Policy Committee's growth forecast for the period. ICRA further noted that the 7 percent growth in the June quarter would mark a four-quarter low. Business sentiment among services companies weakened significantly in the June quarter of fiscal year 2027, with optimism levels dropping to the lowest point in five years.

This decline was influenced by challenges arising from the West Asia crisis and persistent wage cost pressures. Under the assumption of an average crude oil price of USD 80-85 per barrel in 2026-27, ICRA anticipates real GDP growth to moderate to 6.7 percent in the fiscal year from 7.7 percent in 2025-26. However, the risk is predominantly on the downside due to ongoing tensions in West Asia and uncertainties related to the monsoon season.

Conversely, nominal GDP expansion is projected to surge to a four-year high of 13 percent in 2026-27, up from 8.9 percent in 2025-26, driven by expectations of a hardening inflation print.