ICRA GDP Projection
India GDP Growth Moderates to 7.2 Percent in Q3 FY2025-26: ICRA has projected India’s year-on-year GDP growth to moderate to 7.2% in Q3 FY2025-26, compared to 8.2% in Q2 FY2025-26. The estimate reflects weakening momentum in key sectors despite resilience in industry.
The rating agency has anchored its projection to the existing GDP dataset. Growth in the first half of FY2025-26 stood at around 8.0%, indicating a gradual deceleration in the third quarter.
Static GK fact: India calculates GDP using the base year 2011-12, as notified by the Ministry of Statistics and Programme Implementation.
Sector Wise Performance
The services sector is expected to grow at 7.8% in Q3 FY26, down from 9.2% in Q2 FY26. Lower government spending and weaker services exports have weighed on performance. Services account for more than 50% of India’s Gross Value Added (GVA), making this slowdown significant.
The agriculture sector is projected to grow at 3.0%, compared to 3.5% in the previous quarter. Uneven output trends and base effects have moderated expansion.
Static GK Tip: Agriculture still employs nearly 45% of India’s workforce, although its share in GDP is much lower.
In contrast, the industrial sector recorded a six-quarter high growth of 8.3% in Q3 FY26, up from 7.7% in Q2 FY26. Manufacturing and infrastructure activity supported this improvement. However, industrial gains may not fully offset weakness in services and agriculture.
Reasons Behind the Slowdown
According to Aditi Nayar, Chief Economist at ICRA, multiple factors have contributed to the moderation. A key reason is the unfavourable base effect, where high growth in the previous year reduces current comparative growth.
Another major factor is the contraction in Government capital expenditure (capex). Central government capex declined by 23.4% year-on-year in Q3 FY26, compared to a strong 47.7% growth in Q3 FY25.
Weak merchandise exports and subdued state government revenue expenditure further dampened overall demand. Despite these headwinds, festive demand and GST rationalisation measures helped keep growth above the 7% mark.
Static GK fact: The Goods and Services Tax (GST) was introduced on 1 July 2017 through the 101st Constitutional Amendment Act.
Government Spending Trends
Central government capex fell to ₹2.1 trillion in Q3 FY26, down from ₹3.1 trillion in Q2 FY26. Revenue expenditure trends were also muted.
Central non-interest revenue expenditure declined by 3.5% YoY, while state governments’ non-interest revenue growth eased to 2.7% from 7.3% in the previous quarter. Combined central and state revenue spending grew marginally by 0.3% YoY, reflecting cautious fiscal management.
Static GK Tip: Capital expenditure creates long-term assets like roads and railways, while revenue expenditure covers salaries, subsidies and interest payments.
Outlook Ahead
While industrial recovery offers support, weaker services growth and reduced government spending may limit overall momentum. The 7.2% projection signals moderation but still places India among the faster-growing major economies.
Future growth will depend on export recovery, sustained industrial expansion, and revival in government capital spending.
Static Usthadian Current Affairs Table
India GDP Growth Moderates to 7.2 Percent in Q3 FY2025-26:
| Topic | Detail |
| Projected GDP Growth Q3 FY2025-26 | 7.2 percent |
| Previous Quarter Growth | 8.2 percent in Q2 FY2025-26 |
| Services Sector Growth | 7.8 percent |
| Agriculture Growth | 3.0 percent |
| Industrial Growth | 8.3 percent |
| Central Government Capex Change | Contracted 23.4 percent YoY |
| GST Launch Date | 1 July 2017 |
| GDP Base Year | 2011-12 |
