India’s GDP Growth Projected at 6.7 percent in Q1 FY26: ICRA

India’s GDP is expected to grow by 6.7 percent in the first quarter of FY26, slightly higher than the RBI Monetary Policy Committee’s estimate of 6.5 percent, according to a report released by credit rating agency ICRA. The Gross Value Added (GVA) is projected to rise by 6.4 percent during the same period.

This growth is being driven by strong government capital and revenue expenditure, improved exports to certain markets, and early signs of a recovery in consumption. Aditi Nair, Chief Economist at ICRA, noted that a sharp rise in indirect tax collections is also expected to support this momentum.

The report anticipates services GVA to grow at 8.3 percent in Q1 FY26, an eight-quarter high, compared to 7.3 percent in the previous quarter. Urban demand is likely to strengthen during the festive season, aided by the expected easing of monetary policy and possible cuts in GST rates.

Additionally, the combined non-interest expenditure of 24 state governments is projected to rise by 10.7 percent year-on-year in Q1 FY26, up from 7.2 percent in the previous quarter. The central government’s non-interest revenue expenditure is also expected to increase by 6.9 percent, reversing a 6.1 percent decline in the fourth quarter of FY25.