India’s domestic GDP growth is set to hit 7.6% in H1 FY26, up from 6.1% last year, says an ICICI report. This surge is credited to robust manufacturing, services, and government spending, with overall FY26 growth projected at 7.0%.
The domestic GDP growth in the first half of the current financial year, FY26, is expected to come in at 7.6 per cent, higher than the 6.1 per cent recorded during the same period last year, as highlighted in a report by ICICI.
The report noted that economic activity has remained strong through the first two quarters of the year, supported by robust manufacturing, services and continued government spending. It stated “India’s GDP growth in H1FY26 is now estimated at 7.6 per cent YoY compared with 6.1 per cent YoY in H1FY25”.
Full-Year Projections and Fiscal Outlook
It added that while growth momentum in the second half of FY26 may moderate to 6.4 per cent year-on-year due to lower exports and a slowing pace of government capital expenditure, overall consumption is likely to remain resilient. The report also said that the Centre has fiscal room to maintain spending if it is able to undertake some divestments and raise additional resources. On this basis, ICICI expects GDP growth to be 7.0 per cent in FY26 and 6.5 per cent in FY27.
Q2 Performance Analysis
For the July-September quarter, the report stated that India’s real GDP is expected to grow at 7.5 per cent year-on-year, while Gross Value Added (GVA) growth is estimated at 7.3 per cent. This expansion is expected to be driven mainly by the manufacturing and services sectors. Front-loaded government expenditure and buoyant goods exports are also likely to support growth in the second quarter.
The report observed that after a strong GDP performance in Q1, the economy appears to have maintained its momentum in Q2. This can be seen in seasonally adjusted indicators across consumption, industry and services. On a year-on-year basis, industry and services continue to show positive momentum, followed by consumption.
Impact on Consumption Demand
ICICI pointed out that the GST rate reduction announced during the middle of the second quarter, and implemented toward the end of the quarter, had a temporary impact on consumption demand. Part of the consumer spending appears to have been deferred to the next quarter, as reflected in improved retail sales across several segments in Q3.
Resilient Growth Outlook
The report outlined that India’s growth outlook remains strong, supported by broad-based economic activity and resilient domestic demand, even as external headwinds and a slower pace of government capex may weigh slightly on growth in the coming months. (ANI)
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