ICRA Predicts 6.2% GDP Growth for India in FY26

In its latest economic outlook, ICRA has projected India’s real GDP growth for FY2025–26 to dip slightly to 6.2%, down from 6.5% in FY2024–25, citing a slowdown in merchandise exports and continued uncertainty in global trade dynamics. However, strong rural demand, supportive fiscal measures, and higher capital expenditure are expected to sustain economic momentum despite headwinds.

Why in News?

The ICRA forecast, released on June 18, 2025, offers a key insight into India’s evolving macroeconomic scenario for FY26. It draws attention due to A revised GDP growth projection below the previous fiscal Changing dynamics in inflation, fiscal deficit, and external trade, Strong rural resilience amid global slowdown, Implications for budgetary policy and investment planning.

GDP & GVA Growth Estimates

• GDP Growth (FY26): 6.2% (Decrease from 6.5% in FY25)
• GVA Growth (FY26): 6.0% (Decrease from 6.4% in FY25)

Inflation & Fiscal Estimates

• CPI Inflation: Expected to remain above 4.2%
• WPI Inflation: Over 1.8%
• Fiscal Deficit (FY26): Projected at 4.4% of GDP
• Current Account Deficit: Between 1.2–1.3%

Rural Demand Outlook

Rural demand expected to remain resilient, driven by,

• Rabi cash flows
• Above-normal reservoir levels
• Moderation in food inflation
• Income tax relief measures

Investment & Capex Trends

• Centre’s capital expenditure to increase by 10.1%
• This will stimulate public investment and infrastructure development

Private investment may see limited growth due to,

• Weak external demand
• Trade policy uncertainties

Export Scenario

• Merchandise exports likely to remain muted
• Services exports expected to outpace merchandise growth
• Outlook reflects global economic uncertainty and domestic policy reorientation

Disposable Income Boost

Household incomes to benefit from,

• Tax relief in Union Budget 2025–26
• Rate cuts reducing EMIs
• Stabilizing inflation, particularly food prices