What Does ICRA Predict for India's GDP Growth in 2025-26?

ICRA's Economic Forecast for India

Kolkata: The prominent ratings agency ICRA has recently forecasted that India's real GDP growth for the financial year 2025-26 is likely to surpass 6.5 percent.

Additionally, the agency anticipates that the real Gross Value Added (GVA) growth will exceed 6.3 percent during the same timeframe.

While GDP reflects the overall value of goods and services produced in the nation, GVA accounts for the total value produced minus the costs of intermediate goods and services.

In terms of inflation, the Consumer Price Index (CPI) is projected to remain above 4.2 percent, with the Wholesale Price Index (WPI) expected to exceed 2.7 percent for the current fiscal year.

ICRA estimates the fiscal deficit to be around 4.4 percent of GDP, while the current account deficit is projected to be at -1 percent during this period.

The agency notes that rural demand is expected to stay strong, supported by Rabi cash flows and favorable reservoir levels.

Moreover, the combination of significant income tax relief in the Union budget for 2025-26, along with rate cuts leading to reduced EMIs and a decrease in food inflation, is likely to enhance household disposable incomes.

However, the report indicates that India's merchandise exports may continue to show sluggishness in the near future.

On the other hand, services exports are anticipated to grow at a faster rate than merchandise exports, according to ICRA's outlook.

The Centre's capital expenditure is projected to increase by 10.1 percent in 2025-26, which is expected to stimulate investment activities.

Nevertheless, private capital expenditure may face challenges due to a subdued export outlook and uncertainties surrounding trade policies.