GDP growth seen at 7 pc for Q2 FY26: ICRA

India’s GDP growth is seen to moderate in the July-September period of FY26 to 7%, from 7.8% in the previous quarter, amid lower government spending, according to rating agency ICRA. It said that while the services and agriculture sectors would lose some momentum in the second quarter, industrial performance would be strong, propelled by manufacturing, construction and favourable base effects. This is expected to underpin the quarter’s economic activity. 

The Indian economy had expanded 5.6% in Q2 (July-September) of the 2024-25 fiscal. ICRA Chief Economist Aditi Nayar said a lower YoY rise in government spending is likely to weigh on the pace of the GDP and GVA growth in Q2 FY2026 compared to Q1 FY2026. However, inventory stocking related to the early onset of the festive season, enhanced by the GST-rationalisation induced volume pick-up, and upfronting of exports to the US ahead of the tariffs, are expected to boost the performance of the manufacturing sector, as per a report.

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