Investment push may spur GDP growth to 6.6% in FY26: Ind-Ra

The agency forecasts a 6.4% growth for 2024-25.

“The Indian economy has experienced a cyclical growth slowdown in the past three quarters, which it expects to reverse from the third quarter of 2024-25. The gross domestic product (GDP) growth till 2023-24 was impacted by the after effects of Covid-19, even the base effect impacted the quarterly GDP growth,” said Devendra Kumar Pant, chief economist and head public finance, Ind-Ra.

India’s GDP growth had fallen to a seven-quarter low of 5.4% in the second quarter of the current financial year, according to official data released last week.

While the GDP growth in the first quarter of 2024-25 was impacted by the combination of a strong base effect and the general elections in May, the growth in the second quarter of 2024-25 witnessed the prolonged impact of weak private sector capital expenditure, Pant added.

Looking ahead, the GDP growth is expected to range between 6.3% and 7% over the next six quarters, according to the agency.In 2025-26, investment growth is forecast to outpace consumption growth, with gross fixed capital formation (GFCF) expected to rise by 7.2% compared to 6.9% growth in private final consumption expenditure (PFCE). The gross value added (GVA) growth is projected to rise by 6.6% in 2025-26, with services leading the highest growth of 7.4%, followed by industry at 6.6% and agriculture at 3.4%.

Inflation is expected to fall to the 4% mark from the second half of 2025-26, as per Ind-Ra’s forecast. For the current financial year, inflation is projected to be 4.9%, slightly above the Reserve Bank of India’s estimate of 4.8%.