Icra pegs India's GDP growth at 6.2% for FY26, down from 6.5% in FY25

Leading rating agency Icra, in its latest outlook, said India's real GDP growth for 2025-26 will be 6.2 per cent, down from 6.5 per cent in the preceding financial year.

Real Gross Value Added (GVA) growth is also expected to ease to 6 per cent from 6.4 per cent.

Regarding inflation, the Consumer Price Index (CPI) is expected to be above 3.5 per cent, while the Wholesale Price Index (WPI) will be over 1.8 per cent for the current fiscal, the report added.

Icra has forecast the fiscal deficit to be 4.4 per cent of GDP for 2025-26, with the current account deficit projected at 1.2 per cent to 1.3 per cent during the same period.

According to Icra, rural demand is likely to remain upbeat, aided by Rabi cash flows and above-normal reservoir levels.

It also said that the combination of the sizeable income tax relief in the Union budget for 2025-26, rate cuts leading to lower EMIs and moderation in food inflation is expected to boost household disposable incomes.

The report added that the tepidness in India's merchandise exports is expected to continue in the near term.

Services exports are likely to outpace merchandise export growth, according to the Icra outlook.

The Centre's capital expenditure is budgeted to rise by 10.1 per cent in 2025-26, which will boost investment activities, it added.

However, private capital expenditure may gain some traction on the face of a muted outlook for exports and uncertainty around trade policies, the report said.