india-s-gdp-growth-down-to-6-2-pc-icra

India’s GDP growth is projected to slow to 6.2 per cent in FY27 from the earlier estimate of 6.5 per cent due to persistently high crude oil prices driven by the ongoing West Asia conflict, according to rating agency ICRA.

For FY26, ICRA has pegged India’s economic growth at 7.5 per cent, slightly below the National Statistical Office’s (NSO) Second Advance Estimate of 7.6 per cent for the financial year.

“ICRA now expects crude oil prices to average around USD 95 per barrel in FY27, compared with our previous assumption of USD 85 per barrel, considering the continued firmness in prices amid the deadlock in West Asia. As a result, we have revised our baseline forecast for FY27 GDP growth, at constant 2022-23 prices, downward to 6.2 per cent from the earlier 6.5 per cent,” ICRA chief economist Aditi Nayar said.

 

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The agency further stated that GDP growth during the fourth quarter of FY26 is likely to moderate to a three-quarter low of 7 per cent, compared to 7.8 per cent recorded in the third quarter.

According to ICRA, softer momentum in the industrial and services sectors may have slowed overall GDP expansion during the quarter, although the agriculture sector is expected to have shown some improvement.

“However, weaker manufacturing output growth, a contraction in exports, and early signs of margin pressure linked to the fallout from the West Asia crisis may have impacted industrial gross value added (GVA) growth during the quarter. Consequently, we expect GDP growth to ease to a three-quarter low of 7 per cent in Q4 FY2025-26, below the NSO’s implied estimate of 7.3 per cent for the quarter, though the pace remains fairly strong,” Nayar noted.

India’s merchandise exports also came under pressure in the March quarter of FY26 as slowing global demand and shipping disruptions caused by the West Asia conflict hurt trade activity. Exports declined 2.8 per cent year-on-year during the quarter after posting a modest 1.4 per cent increase in the previous December quarter.