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Business EconomyPosted at: Mar 7 2025 3:49PM


ICRA pegs FY26 GDP growth at 6.5 pc on pick-up in consumption

New Delhi, Mar 7 (UNI) India’s GDP growth outlook for FY2026 remains healthy at around 6.5% amid expectations of a pick-up in domestic consumption and investment activity, research and rating firm ICRA said on Friday.
ICRA said that rural demand is likely to remain upbeat in the near term, aided by farm cash flows from the rabi harvest and above-normal reservoir levels which would provide some insurance against a delayed start or inadequate rainfall in the early part of the monsoon season.
"However, beyond H1 CY2025 (first half of 2025), a normal and well-distributed monsoon remains key to support farm sentiments and incomes. Urban consumption, which has been sluggish in the ongoing fiscal, is set to improve in FY2026, supported by favourable developments including income tax relief announced in the Union Budget, the onset of rate easing cycle and expectations of moderation in food inflation," the rating agency said.
"Additionally, investment activity will be supported by the healthy expansion in Centre’s capex, continuation of capex loans to state governments and healthier outlook for housing demand vis-à-vis FY2025, auguring well for construction activity and the GDP growth," it further said.
ICRA expects private capex to remain measured and non-exuberant amid external headwinds.
Overall, the rating agency has projected the GDP and GVA at basic prices to grow by 6.5% and 6.3%, respectively, in FY2026.
"Nevertheless, the impact of sustained exchange rate depreciation on the profitability of some corporates and external headwinds related to tighter trade policies poses key downside risks to the outlook," it said.
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