ICRA Projects India’s Q1FY26 GDP Growth at 6.7%, Higher than RBI’s 6.5% Forecast.
Economy Business
In August 2025, ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited) projected India’s Gross Domestic Product (GDP) growth at 6.7% for Q1 of FY2025-26 (April–June 2025). The growth outlook is supported by higher government expenditure and robust export performance. This projection is higher than the Reserve Bank of India (RBI)’s forecast of 6.5%, though lower than the 7.4% recorded in Q4FY25.
- ICRA has projected India’s Gross Value Added (GVA) growth at 6.4% for Q1FY26, compared to 6.8% in Q4FY25. This indicates a slight moderation in economic activity despite strong fiscal push. The decline reflects slower expansion in some industrial and services segments compared with the previous quarter.
- The report highlighted a sharp rise in Capital Expenditure (CapEx) by the central government. Gross CapEx surged by 52% year-on-year (YoY) to ₹2.8 trillion in Q1FY26.
- This compares with a 33.4% growth in Q4FY25, and a 35% contraction in Q1FY25, showcasing a significant turnaround in government-led infrastructure spending.
Main Point :- (i) According to ICRA, the gap between GDP and GVA growth is projected at 30 basis points (bps) in Q1FY26, down from 62 bps in Q4FY25. A positive gap signals that net indirect taxes (taxes minus subsidies) are likely to continue supporting GDP growth over GVA.
(ii) The agency concluded that India’s Q1FY26 economic momentum will be driven by strong export demand and government spending, but overall growth is expected to remain lower than the 7%+ levels achieved in the previous quarter.
(iii) This outlook provides a balanced yet cautious assessment of India’s short-term economic trajectory.
About ICRA Limited
MD & CEO : Ramnath Krishnan
Headquarters : Gurugram, Haryana
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