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ICRA Projects India’s Q1FY26 GDP Growth at 6.7%, Higher than RBI’s 6.5% Forecast.

Economy Business | Dated: 22 Aug 2025

In August 2025, ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited) projected India’s Gross Domestic Product (GDP) growth at 6.7% for Q1 of FY2025-26 (April–June 2025). The growth outlook is supported by higher government expenditure and robust export performance. This projection is higher than the Reserve Bank of India (RBI)’s forecast of 6.5%, though lower than the 7.4% recorded in Q4FY25.

🎯 Key Highlights:

  • - ICRA has projected India’s Gross Value Added (GVA) growth at 6.4% for Q1FY26, compared to 6.8% in Q4FY25. This indicates a slight moderation in economic activity despite strong fiscal push. The decline reflects slower expansion in some industrial and services segments compared with the previous quarter.
  • - The report highlighted a sharp rise in Capital Expenditure (CapEx) by the central government. Gross CapEx surged by 52% year-on-year (YoY) to ₹2.8 trillion in Q1FY26.
  • - This compares with a 33.4% growth in Q4FY25, and a 35% contraction in Q1FY25, showcasing a significant turnaround in government-led infrastructure spending.

💡 Other Important Facts:

  • (i) According to ICRA, the gap between GDP and GVA growth is projected at 30 basis points (bps) in Q1FY26, down from 62 bps in Q4FY25. A positive gap signals that net indirect taxes (taxes minus subsidies) are likely to continue supporting GDP growth over GVA.
  • (ii) The agency concluded that India’s Q1FY26 economic momentum will be driven by strong export demand and government spending, but overall growth is expected to remain lower than the 7%+ levels achieved in the previous quarter.
  • (iii) This outlook provides a balanced yet cautious assessment of India’s short-term economic trajectory.

📚 Test Your Knowledge:

Recently, which credit rating agency projected India’s GDP growth at 6.7% for Q1 FY2025-26?

Correct Answer: ICRA

🚀 Quick Recap:

About ICRA Limited

  • MD & CEO : Ramnath Krishnan
  • Headquarters : Gurugram, Haryana