Informist, Monday, Aug. 25, 2025

By Shubham Rana

NEW DELHI - India's GDP growth likely moderated in the June quarter from a four-quarter high of 7.4% in Jan-Mar because of slower growth in industrial production and weaker urban consumption. According to an Informist poll of 17 economists, India's GDP is expected to have expanded 6.7% in the first quarter of 2025-26 (Apr-Mar).

While GDP growth is expected to have moderated in the last quarter, it is still seen higher than the Reserve Bank of India's forecast of 6.5%. The Indian economy grew 6.5% in the first quarter of FY25. The statistics ministry will release GDP data for the quarter ended June at 1600 IST on Friday.

"Lower expansion in the industrial sector and agriculture is likely to outweigh a pick-up in the performance of the services sector," credit rating agency ICRA said in a report. Industrial growth is expected to have moderated in the June quarter because of the poor performance of the mining and manufacturing sectors, economists said. The construction sector's performance, however, is seen improving in the June quarter because of a pick-up in government capital expenditure.

The Index of Industrial Production grew just 2.0% in the first three months of FY26 compared with 5.4% growth a year ago, government data showed. Mining sector output fell 3.0% on year in the June quarter, compared with a 7.9% rise a year ago, impacted by the monsoon rains. Growth in manufacturing sector production also slowed down in Apr-Jun.

Agriculture sector growth is seen staying resilient in the June quarter, keeping pace with the 5.4% growth in the March quarter, because of "good monsoon" and robust sowing activity, economists said. "On services growth, the biggest drag continues to emanate from financial services with credit growth still slowing, but with RBI frontloading the rate cuts, credit disbursement is likely to improve in coming quarters," BofA Securities said in a report.

GDP growth in the June quarter was likely aided by the statistical effect of higher taxes and falling subsidy payouts, economists said. Gross value added growth, which some economists consider a more reliable indicator of economic activity than GDP, is seen at 6.4% in the quarter ended June, lower than 6.8% a quarter ago.

The June quarter GDP growth print is also seen supported by lower inflation, economists said. "The sharp moderation in WPI and CPI inflation will result in GDP deflator growth slowing down in Q1FY26. This will boost real growth rate numbers," IDFC FIRST Bank Chief Economist Gaura Sen Gupta said in a report. CPI inflation averaged 2.7% in the June quarter, compared with 4.9% a year ago, and WPI inflation fell to 0.3% in Apr-Jun from 2.5% a year ago.

While GDP growth is seen outperforming RBI's expectations at the start of FY26, downside risks to growth have increased with the US imposing a 50% tariff on imports from India. If sustained, the 50% tariff could hit India's growth by around 50 basis points, said economists who currently see GDP growth at 6.3% in FY26, 20 bps lower than RBI's forecast. "That said, some policy easing including cuts to GST rates would cushion the blow and India should still remain among the world's best performers in the coming quarters," Capital Economics said in a note.

The following table details the GDP growth estimates of economists:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Vandana Hingorani

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.