ICRA Projects India’s April-June GDP Growth At Four-Quarter Low Of 7%

India’s economic growth is expected to moderate to 7% in the April-June quarter of FY2027, marking a four-quarter low, as expansion in the services sector is likely to slow, rating agency ICRA said.

The agency has estimated real gross value added (GVA) growth at 7.2% for the first quarter, lower than the 7.9% recorded in the January-March quarter of FY2026.

ICRA said domestic activity indicators across industry and services remained broadly healthy despite concerns over higher commodity prices stemming from the West Asia conflict.

"ICRA projects the real GDP expansion to have eased to 7% in Q1 2026-27 from 7.8% in Q4 2025-26, in line with the Monetary Policy Committee's growth forecast for the quarter," ICRA Chief Economist Aditi Nayar said on Monday, as per PTI.

FY27 Growth Forecast At 6.7%

For the full FY2027, ICRA has retained its GDP growth forecast at 6.7%, down from 7.7% in FY2026. The projection is based on an assumption of average crude oil prices of around $80-$85 per barrel.

"Based on the assumption of an average crude oil price of $80-85/barrel in 2026-27, ICRA expects the real GDP growth to moderate to 6.7% in the fiscal from 7.7% in 2025-26, with risks tilted to the downside amid continued tensions in West Asia and monsoon-related uncertainty," Nayar said.

ICRA expects nominal GDP growth to rise sharply to around 13% in FY2027 from 8.9% in FY2026, driven by a likely increase in inflation.

Services Growth Likely To Moderate

ICRA expects services GVA growth to slow to 7.9% in Q1 FY2027 from 9.9% in the preceding quarter. The agency said several indicators related to transport, mobility and public spending recorded slower year-on-year growth, although service exports, housing sales and financial indicators continued to support parts of the sector.

Business sentiment among services companies has reportedly weakened materially during the June quarter, with optimism falling to a five-year low amid the West Asia crisis and persistent wage cost pressures.

Agriculture, forestry and fishing GVA growth, meanwhile, is projected at 4%, compared with 3.6% in Q4 FY2026. According to ICRA, strong growth in rabi output, including coarse cereals, oilseeds, pulses and rice, is expected to support the sector.

Industry To Remain Resilient Despite Pressure

ICRA estimates industrial GVA growth at 7.7% in Q1 FY2027, slightly higher than 7.3% in the previous quarter. Industrial production growth accelerated to 5.8%, a six-quarter high, while manufacturing output expanded 6.3%.

The agency, however, said that higher input costs are likely to compress corporate margins, particularly after sizeable losses at oil refining companies, potentially limiting the benefit of stronger production volumes for industrial GVA growth.

ICRA said muted growth in indirect taxes and a sharp rise in combined fertiliser and fuel subsidy expenditure could result in a compression in net indirect taxes, placing GDP growth about 0.2 percentage points below projected GVA growth.