ICRA said that there may be a slight decline in the services and agriculture sectors in the second quarter, but manufacturing, construction and industrial performance are expected to remain strong due to a favourable comparative base.

Rating agency ICRA estimates that the country's GDP will grow at 7 per cent in the current financial year.

India's GDP Growth: Rating agency ICRA said on Tuesday that India's GDP growth rate is projected to decline to 7 per cent on a quarterly basis in the July-September quarter of the fiscal year 2025-26, compared to 7.8 per cent in the previous quarter. The slowdown in growth is primarily attributed to a slowdown in government spending.

Meanwhile, the State Bank of India (SBI) stated in its research report that the Indian economy will grow at around 7.5 per cent in the second quarter of fiscal year 2026, driven by GST reforms, increased demand in rural areas, and robust investment. According to news agency ANI, this momentum is expected to continue, driven by strong performance in the service and manufacturing sectors and improved demand. The report further stated that the reduction in GST rates led to increased shopping during the festive season.

Decline in service-agriculture sector

ICRA said that while services and agriculture sectors may see a slight decline in the second quarter, manufacturing, construction and industrial performance are expected to remain strong due to a favourable comparative base. This will support economic activity in the quarter.

The agency said in a statement that GDP growth is projected to be 7 percent in the second quarter of fiscal year 2025-26, compared to 7.8 per cent. ICRA said that while services and agriculture sectors may see a slight decline in the second quarter, manufacturing, construction, and industrial performance are expected to remain strong due to a favourable comparative base.-on-year growth in government spending could impact the pace of GDP and GVA (gross value added) growth in the second quarter compared to the first. She added that inventory stockpiling related to the start of festivals, increased demand from GST rate rationalization, and a pick-up in exports to the US before the tariffs come into effect will boost the manufacturing sector. Consequently, industry GVA growth is likely to outpace the services sector after four consecutive quarters.