The Indian economy likely grew at a four-quarter year low pace of 7.2% in the April-June quarter, but still remained resilient as economic activity held up despite the impact of the war in West Asia conflict, according to an FE poll of 15 economists.
At 7.2%, the April-June gross domestic product (GDP) growth will be lower than 7.8% in the March quarter but higher than 6.8% in April-June 2025. Economists’ expectation for the April-June GDP growth is also higher than the Reserve Bank of India’s projection of 7%.
Estimates in the poll ranged from 6.7% to 8.0%. The Ministry of Statistics and Programme Implementation will release the April-June GDP data on August 31.
The likely above 7% GDP growth reflects “continued strength across high-frequency economic indicators amid government actions to limit the impact of global volatility,” said Tanay Dalal, senior vice-president, business and economic research at Axis Bank.
GDP growth is likely to be pulled down by agriculture and services sectors, while industrial growth is expected to rise, economists said.
According to economists, the industrial gross value added (GVA) is likely to rise to around 8% from 7.3% in the January-March quarter. Within industry, all sub-sectors are expected to see better performance except manufacturing, economists said.
“Listed companies results reflected that profit growth has held-up despite jump in raw material costs. The strong pickup in sales growth has supported profit growth. Hence manufacturing GVA growth is expected to see a moderate slowdown,” said Gaura Sen Gupta, chief economist at IDFC FIRST Bank.
Electricity generation growth is likely to rise in April-June, supported by the higher temperatures and delayed onset of the southwest monsoon. High-frequency data for construction activity showed positive growth momentum in April-June.
Services sector growth is seen moderating to around 8% in April-June from 9.9% a quarter ago, pulled down by the trade, hotels, and transport sector. “Services growth remains strong with the consumer largely protected from the surge in energy cost,” Sen Gupta said.
Agricultural sector is seen as the biggest drag on GDP growth in April-June, with the sector’s growth projected to moderate to less than 3% from 3.6% in the March quarter. The slowdown in agriculture growth reflects the delay in the monsoon, economists said.
“On the demand side, consumer demand is expected to have driven overall GDP growth in the quarter,” HDFC Bank economists said in a report. “Our rural and urban demand index shows continued momentum in consumer spending with limited pass-through of higher input costs and benefit of GST rate cuts and income tax cuts still lingering in the system.”
Investment likely remained robust in April-June, thanks to strong capital expenditure growth by the Central and state governments, economists said.
Going forward, the West Asia war and monsoon-related uncertainties are likely to pull down GDP growth. The RBI projects FY27 GDP growth easing to 6.7% from 7.7% in FY26, with growth seen hitting a low of 6.4% in July-September.
However, nominal GDP growth is projected to rise to around 13% in FY27 on the back of higher inflation, particularly wholesale price index inflation and producer price index inflation.