ICRA lowers India’s FY27 GDP growth estimate to 6.2%

India’s GDP is likely to grow at 6.2% in FY27, down from the earlier estimate of 6.5% amid elevated crude oil prices triggered by the West Asia crisis, according to rating agency ICRA.

For FY26, ICRA estimates GDP growth at 7.5%, marginally lower than the National Statistical Office's (NSO) Second Advance Estimate (SAE) of 7.6% for the fiscal.

“ICRA now assumes crude oil prices to average at $95/bbl in FY27, against our prior estimate of $85/bbl, given the ongoing stickiness in prices amid the stalemate in West Asia. Consequently, we have pared our baseline forecast for the FY27 GDP growth (at constant 2022-23 prices) to 6.2% from the 6.5% expected earlier,” ICRA Chief Economist Aditi Nayar said.

The rating agency also said GDP growth in the fourth quarter is expected to ease to a three-quarter low of 7% from 7.8% in Q3 of 2025-26.

A slower expansion across the industrial and services sectors is expected to have moderated GDP growth between these quarters, even as the performance of the agriculture sector is likely to have improved slightly.

“However, a slower rise in manufacturing volumes, contraction in exports, and nascent signs of margin pressure amid the West Asia fallout may have weighed on the industrial gross value added (GVA) growth performance in the quarter. Consequently, we expect the GDP growth to have slowed to a three-quarter low of 7% in Q4 2025-26, below the NSO's implicit estimate of 7.3% for the quarter, while remaining quite robust," Nayar said.

Slowing global growth and shipping disruptions triggered by the West Asia conflict weighed on India's merchandise exports in the March quarter of 2025-26, which fell by 2.8% on a YoY basis, after a modest 1.4% rise in the December quarter.