India’s real GDP growth is projected to rise to 7.4 per cent in 2026 from 6.5 per cent in 2025, according to ICRA. The report cites festive demand, GST cuts and seasonal sectoral recovery, while warning of export headwinds and global risks
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India’s real GDP growth is projected to grow at 7.4 per cent in 2026, up from 6.5 per cent in 2025. A report highlighting India’s GDP growth also asserted a seasonal pickup in the electricity, mining and construction sectors.
The report from ICRA also noted that growth is expected to ease below 7 per cent in H2 FY26 from 8 per cent in H1 because of an unfavourable base effect and moderation in exports, as per IANS.
The ICRA report expects a pause in the February 2026 policy review by the RBI, with future decisions to be guided by the FY27 Union Budget and evolving inflation-growth dynamics.
The report also indicated that economic activity remained healthy in the Quarter 3 2026 financial year, aided by GST rate‑cut led festive demand and seasonal upticks in some sectors.
Consumption volumes of goods to be benefited from GST cuts
ICRA, while releasing the report, also highlighted that expectations in volumes of goods and services as well as manufacturing volumes will benefit from GST cuts and festival demand in Q3, though the export drag may intensify in H2 unless a US trade deal materialises.
It also forecasts CPI inflation to plunge to 2 per cent in FY26 from 4.6 per cent in FY25, with WPI at 0.4 per cent.
Earlier in November 2025, CPI rose to 0.7 per cent from 0.3 per cent since October, due to a narrower deflation in food and beverages.
Additionally, mining and construction activity as well as electricity demand are set to witness a seasonal pickup in the coming months, after the easing owing to rainfall-related disruptions, it said.
The Investment Information and Credit Rating Agency (ICRA) also noted, "Cement production is expected to grow 6.5–7.5 per cent in FY26. Steel demand growth may moderate to 7–8 per cent after strong previous years. Electricity demand growth is muted at 1.5–2 per cent for FY26, as per IANS.
A report released by ICRA also flagged external risks, including delays in the US-India trade deal and global policy changes affecting service exports.
It also highlighted domestic risks encompassing subdued export growth, monsoon variability, fiscal constraints, and inflationary pressures from commodity prices.
(With inputs from IANS)
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