Q1 FY27 GDP growth seen at 7%; El Niño remains a concern

Beating all odds, the Indian economy is seen to have grown at about 7% in the first quarter of the fiscal year, led by sustained private demand and strong expansion in the manufacturing sector.

Most analysts expect GDP growth of about 7% in the April to June 2026 quarter despite the uncertainties and supply shocks thrown up by the war in West Asia. While this would be a four-quarter low, it is significantly better than initial fears after the war, which suggested a substantial slowdown in the domestic economy.

The economy grew by 6.8% in the April to June 2025 quarter and 7.8% in the fourth quarter of last fiscal. In FY26, GDP growth is estimated at 7.7%. The Ministry of Statistics and Programme Implementation will release GDP growth estimates for the first quarter of the fiscal on August 31.

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With supply constraints easing and more diversified sources of crude oil available despite continued conflict in West Asia, the impact of the geopolitical turbulence is seen to have somewhat abated on the Indian economy. However, concerns over the impact of El Niño continue, though most agencies expect the economy to fare better this fiscal than was initially feared and have revised their growth forecasts for the fiscal year as well.

India Ratings and Research on Tuesday said it expected GDP growth of about 6.9% in the first quarter of the fiscal year and pegged GDP growth at 6.8% for the fiscal.

CareEdge Ratings has estimated GDP growth at 7.3% and GVA growth at 7.4% in the first quarter of the fiscal. “India's economy remained resilient in Q1 FY27 despite geopolitical tensions, supply-chain disruptions, elevated energy prices, and weather-related risks. Manufacturing remained a key growth driver, supported by stronger IIP growth, improving GST collections, robust automobile demand, and a sharp recovery in non-oil, non-gold exports,” it said, adding that growth in private consumption is expected to inch up to 7.4% in Q1 FY27, supported by a strong uptick in credit growth and GST rationalisation. It has forecast GDP growth at 7% for FY27 from its earlier projection of 6.7%.

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Rating agency ICRA has pegged GDP growth at 7% and GVA growth at 7.2% in the first quarter of the fiscal. Aditi Nayar, Chief Economist, Head-Research & Outreach, ICRA said, “High-frequency indicators across the industrial and services sectors have revealed a healthy picture of domestic volume growth in Q1 2026-27, belying the concerns of a fallout of higher commodity prices in the quarter on account of the West Asia conflict. However, oil refining companies experienced sizeable losses in Q1 2026-27, which would impact the GVA growth.” It has pegged GDP growth at 6.7% this fiscal.

SBI Research has forecast GDP growth at 8% for the first quarter of the fiscal, noting that the underlying momentum remains broad-based.