New Delhi (IANS) India’s GDP growth is projected at 7.4 percent for FY26, up from 6.5 percent in FY25, a report has said, highlighting a seasonal pick-up in electricity, mining, and construction sectors. A report from ICRA said 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. The 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.
Economic activity remained healthy in Q3 FY26, aided by the GST rate cut-led festive demand and seasonal upticks in some sectors. ICRA expects consumption volumes of goods and services, as well as manufacturing volumes, to have benefited from GST cuts and festival demand in Q3, though the export drag may intensify in H2 unless a US trade deal materialises. The firm forecasts CPI inflation to plunge to 2 percent in FY26 from 4.6 percent in FY25, with WPI at 0.4 percent.
CPI rose to 0.7 percent in November 2025 from 0.3 percent in 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 pick-up in the coming months, after the easing owing to rainfall-related disruptions, it said. “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 the strong previous years. Electricity demand growth is muted at 1.5–2 per cent for FY26,” the report noted.
It also flagged external risks, including delays in the US-India trade deal, and global policy changes affecting service exports. Domestic risks encompass subdued export growth, monsoon variability, fiscal constraints, and inflationary pressures from commodity prices.
