India's GDP Growth Expected to Slow to 7% in September Quarter, Says ICRA

India’s GDP growth is projected to moderate to 7% in the July to September quarter of FY26, compared with 7.8% in the previous quarter, driven by slower government spending and easing momentum in services and agriculture. 

ICRA stated that the moderation is largely attributed to a lower rise in government expenditure during the period. Despite this, industrial performance is expected to remain strong, aided by manufacturing, construction, and favourable base effects supporting overall economic activity. 

Sectoral Trends Behind the Projection 

According to the rating agency, services and agriculture are likely to witness softer expansion in the quarter. On the other hand, industry is expected to outpace services after 4 quarters, driven by manufacturing supported by inventory stocking for the early festive season and improved volumes following GST rationalisation. 

Read More: India's Economy Projected to Grow at 6.5% Till 2027, Supported by Infrastructure and Consumption: Moody’s Ratings! 

Additional Drivers Influencing Q2 FY26 Performance 

ICRA highlighted that export frontloading to the US ahead of tariff changes contributed to a pickup in manufacturing. In comparison, India’s GDP had grown 5.6% in the same July to September quarter of FY25. The National Statistics Office will release the official data on November 28, 2025. 

Conclusion 

India’s economic growth is expected to moderate to 7% in Q2 FY26 as softer government spending and slower services activity weigh on expansion, while manufacturing and construction continue to offer resilience to overall performance. 

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