In August 2025, India’s Credit Rating Agency ICRA Limited, formerly Investment Information and Credit Rating Agency of India Limited, has projected that India’s Gross Domestic Product (GDP) at 6.7% for 1st Quarter (Q1: April-June) of Financial Year 2025-26(FY26), supported by the higher government spending and robust export performance.
- This growth projection is higher than Reserve Bank of India (RBI)’s forecast of 6.5%, though lower than 7.4% recorded in Q4FY25.
Exam Hints:
- What? India’s GDP projection for Q1FY26
- By whom? ICRA Limited
- GDP for Q1FY26: 6.7% (higher than RBI’s forecast of 6.5%)
- GVA for Q1FY26: 6.4%
- Growth Projections for sectors: industry (4.0%), agriculture (4.5%) and services sector (8.3%)
Key Projections:
Gross Value Added (GVA): ICRA has further projected that GVA growth will decrease from 6.8% (in Q4FY25) to 6.4% (in Q1FY26).
CapEx: The Centre’s Gross Capital Expenditure (CapEx) surged by 52% year-on-year to Rs.2.8 trillion in Q1 FY2026, compared with 33.4% growth in Q4 FY2025 and a 35% contraction in Q1 FY2025.
Gap between GDP & GVA growth: As per ICRA, the gap between GDP and GVA growth is projected to remain positive i.e. at 30 basis points (bps) in Q1FY26, though lower than 62 bps recorded in Q4FY25.
Sector-wise Growth Projections: The agency has also highlighted that the slowdown in industrial sector and agriculture is expected to dampen the strong performance of the services sector.
- Industry sector: It has projected that Industrial growth is expected to decrease from 6.5% (in Q4FY25) to 4.0% (in Q1FY26).
- Agriculture sector: This sector is projected to grow at 4.5% (in Q1FY26) compared with 5.4% (in Q4FY25).
- Services Sector: Services are expected to increase to an 8-quarter high of 8.3% (in Q1FY26) over 7.3% registered in Q4FY25. This sector will continue to support the overall GVA as it is backed by robust government expenditure.
- Other Sectors:Sectors like forestry and fishing, are expected to grow at moderate rate i.e. to 4.5% (in Q1FY26) from 5.4% (in Q4FY25), though remains strong compared with 1.5% (in Q1FY25).
Key Contributors:
Combined Capital Outlay and Net Lending: The rating agency has further highlighted that aggregate capital outlay and net lending of 24 state governments increased by 23.0% Y-o-Y to Rs 1.1 trillion (in Q1FY26).
New Project Announcements: ICRA revealed that the value of new project announcements nearly doubled from Rs 3 trillion (a year ago) to Rs 5.8 trillion (in Q1FY26).
- Also, Project completions were recorded at Rs 2.3 trillion compared with projects worth Rs 0.7 trillion completed in same quarter of last financial year, though slightly lower than Rs 2.5 trillion in Q4FY25.
Non-Interest Value: It has noted that the GoI’s non-interest revenue expenditure has registered a positive growth rate i.e. at 6.9%, after witnessing a contraction of 6.1% in the previous quarter.
About ICRA Limited:
Managing Director (MD) and Chief Executive Officer (CEO)- Ramnath Krishnan
Headquarters- Gurugram, Haryana
Established- 1991
