ICRA: India's GDP Growth to Moderate to 7% in Q2

New Delhi, Nov 18 (PTI) Rating agency ICRA on Tuesday projected GDP growth to moderate in July-September period of FY26 to 7 per cent, from 7.8 per cent in the previous quarter, amid lower government spending.

ICRA said while the services and agriculture sectors would lose some momentum in the second quarter, industrial performance would be strong propelled by manufacturing, construction and favourable base effects. This is expected to underpin the quarter's economic activity.

The rating agency in a statement said it expects GDP growth to ease to 7 per cent year-on-year in Q2 (July-September) from 7.8 per cent in Q1 (April-June) FY2025-26.

Indian economy had expanded 5.6 per cent in the Q2 (July-September) of 2024-25 fiscal.

The National Statistics Office (NSO) is slated to release the official data on FY26 Q2 GDP growth estimates on November 28.

ICRA chief economist Aditi Nayar said a lower YoY rise in government spending is likely to weigh on the pace of the GDP and GVA growth in Q2 FY2026 compared to Q1 FY2026.

"However, inventory stocking related to the early onset of the festive season, enhanced by the GST-rationalisation induced volume pick-up, and upfronting of exports to the US ahead of the tariffs, are expected to boost the performance of the manufacturing sector, and help industry GVA growth outpace that of the services after a gap of four quarters." Nayar said.