ICRA forecasts India’s GDP growth for the June quarter at around 7%, noting a slowdown driven by softer services and manufacturing, amid geopolitical pressures and rising energy costs.
ICRA expects India’s economy to have cooled in the June quarter as a slowdown in services outweighed gains in factories and farms, with gross domestic product growth likely slipping to a four-quarter low of about 7% from 7.8% in the previous quarter. The assessment, reported by Deccan Chronicle, points to softer momentum across the services economy after a strong run earlier in the year.
The rating agency said services growth likely eased to 7.9% in the quarter from 9.9% in the March period, with weakness spread across most sub-sectors. Data from the Ministry of Statistics and Programme Implementation showed year-on-year growth slowing in 18 of the 19 Services Production indices in the first two months of the quarter, while business sentiment among services firms fell to its weakest level in five years amid geopolitical strain in West Asia and persistent wage pressure. ICRA also noted softer trends in transport-linked indicators, including fuel use, rail freight, GST e-way bill generation and commercial vehicle sales.
Even so, industry and agriculture are expected to have offered some support. ICRA sees industrial gross value added growth rising to 7.7% from 7.3% in the previous quarter, helped by a smaller contraction in mining output, while agriculture, forestry and fishing are projected to have grown 4.0%, up from 3.6%. Manufacturing, however, is expected to have slowed to 6.0%, its weakest reading since the second quarter of FY25, as uneven monsoon patterns began to weigh on activity.
The broader picture is not uniformly weak. In a separate note, ICRA said its Business Activity Monitor showed 12% year-on-year growth in June, the strongest pace in 32 months, but it still expects GDP growth to settle in a 6.4% to 6.6% range for the quarter because higher energy prices and tight input supplies are likely to squeeze corporate margins. Business Standard also reported that ICRA has trimmed its full-year FY27 growth forecast to 6.2% from 6.5%, citing the drag from elevated crude prices linked to the West Asia crisis.
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