New Delhi: Domestic rating agency ICRA has estimated India’s real GDP growth at a four-quarter low of 7 per cent for the April–June quarter (Q1) of FY27.
This projected expansion represents a deceleration from the 7.8 per cent growth recorded in the January–March quarter of FY26. Slower activity across the services sector primarily drove the sequential moderation, despite strong volume momentum in domestic manufacturing.
[Q4 FY26 GDP Growth: 7.8%] ──▶ [Services Sector Deceleration] ──▶ [Q1 FY27 Project GDP: 7.0%]
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[Full FY27 Real GDP Forecast: 6.7%] ◀──( West Asia Headwinds )───────────┘
Sectoral Expansion and West Asia Headwinds
Significantly, the rating agency projected the industrial sector to grow at 7.7 per cent during the June quarter. Concurrently, agriculture and services sector growth are expected to land at 4 per cent and 7.9 per cent, respectively.
ICRA Chief Economist Aditi Nayar highlighted that domestic high-frequency indicators demonstrated healthy volume expansion. Consequently, this volume performance offset initial concerns regarding elevated commodity prices caused by ongoing West Asia geopolitical conflicts.
Key Economic Metrics Forecast by ICRA:
Real GDP Growth (Q1 FY27): Eased to 7 per cent (four-quarter low).
Full-Year Real GDP (FY27): Projected to moderate to 6.7 per cent from 7.7 per cent in FY26.
Full-Year Nominal GDP (FY27): Accelerated to a four-year high of 13 per cent.
Crucial Crude Baseline: Assumes crude oil prices average $80–$85 per barrel.
Services Sentiment Dips Amid Wage Pressures
Crucially, ICRA expects full-year real GDP growth to settle at 6.7 per cent for the 2026–27 fiscal year.
[FY27 ECONOMIC FORECAST PROFILE]
┌───────────────────────────────────┼───────────────────────────────────┐
▼ ▼ ▼
[Real GDP Growth: 6.7%] [Nominal GDP Growth: 13.0%] [Industrial Sector: 7.7%]
Nayar noted that business sentiments among services companies weakened noticeably in Q1 FY27, reaching a five-year low. Persistent wage cost pressures and Middle East supply chain tensions weighed directly on corporate confidence.
However, nominal GDP growth is projected to accelerate to a four-year high of 13 per cent, driven by hardening inflation trends across domestic markets.
ICRA Economic Growth Projections Snapshot
| Performance Metric / Sector | Previous FY26 Baseline | Q1 FY27 Projection | Full-Year FY27 Target | Core Economic Driver |
| Real GDP Expansion | 7.8% (Q4 FY26) | 7.0 Per Cent | 6.7 Per Cent | Matches MPC quarterly forecasts. |
| Services Sector Growth | Strong Baseline | 7.9 Per Cent | Moderating | Dipped to 5-year sentiment low. |
| Industrial Output | High Volume | 7.7 Per Cent | Sustained | Strong domestic demand offset energy prices. |
| Agricultural Growth | Stable Yields | 4.0 Per Cent | Monsoon Dependent | Balanced monsoon distribution critical. |
| Nominal GDP Growth | 8.9% (FY26) | Hardening Trends | 13.0 Per Cent |
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