India’s FY26 GDP expected to grow 7% on strong H1 performance: ICICI report

New Delhi: India’s economy is expected to record a domestic GDP growth of 7.6 per cent in the first half of the current financial year (FY26), up from 6.1 per cent during the same period last year, according to a report by ICICI.

The report noted that economic activity remained strong across the first two quarters, driven by robust performance in manufacturing and services, alongside sustained government spending.

“India's GDP growth in H1 FY26 is now estimated at 7.6 per cent year-on-year compared with 6.1 per cent year-on-year in H1 FY25,” the report said.

While growth momentum may ease in the second half of FY26 to around 6.4 per cent due to slower exports and reduced government capital expenditure, overall consumption is expected to remain resilient, ICICI said.

The report added that the central government has fiscal space to continue spending, provided it undertakes some divestments and raises additional resources. Based on this, ICICI expects GDP growth of 7.0 per cent for FY26 and 6.5 per cent for FY27.

For the July-September quarter, India’s real GDP is projected to grow 7.5 per cent year-on-year, with Gross Value Added (GVA) growth estimated at 7.3 per cent. This expansion is likely to be supported mainly by manufacturing and services, along with front-loaded government expenditure and buoyant goods exports.

ICICI observed that after a strong performance in Q1, the economy appears to have maintained momentum in Q2, reflected in seasonally adjusted indicators for consumption, industry, and services. On a year-on-year basis, both industry and services contiIndia’s FY26 GDP Expected to Grow 7% on Strong H1 Performance: ICICI Reportnue to show positive growth, supported by consumer spending.

The report also highlighted that a GST rate reduction announced mid-Q2 and implemented towards the end of the quarter had a temporary impact on consumption, with part of the spending deferred to the next quarter. Retail sales across several segments are expected to rebound in Q3.

Overall, ICICI concluded that India’s growth outlook remains strong, underpinned by broad-based economic activity and resilient domestic demand, even as external challenges and a slower pace of government capital expenditure may slightly moderate growth in the coming months.