GDP Preview: Growth Estimated At 6.6% In Q1 FY26

Indian economic growth is likely to continue to stay resilient in the April-June quarter despite easing from the previous quarter.

The gross domestic product is estimated to grow by 6.6% in Q1FY26, according to economists polled by Bloomberg. That's compared to 6.5% in Q1FY25 quarter and 7.4% in Q4FY25.

Gross value added is expected to expand to 6.4%. The gap between the GDP and the GVA is expected to persist with the rise in indirect tax collections in Q1FY26. The GVA is considered a better metric for growth as it is not impacted by fluctuations in indirect tax collections and subsidy expenditure.

The GDP print has got support from few transient factors, such as disinflation, pickup in indirect tax collection and supportive base-effect, according Gaura Sengupta, chief economist at IDFC First Bank.

The sharp moderation in WPI and CPI inflation will result in GDP deflator growth slowing down in Q1 FY26, she explained, adding that this will boost real growth rate numbers.

Moreover, producer margins have widened with reduction in input costs. "Hence real GDP growth in FY26 is likely to look better than nominal GDP growth," said Sengupta, who forecasts nominal GDP growth at 8.5% in Q1 FY26 compared to 10.8% in Q4FY25.

"India’s investment activity held up in Q1 FY2026, boosted by the front-loading of government capex, although this admittedly came on a low base, amid the heightened uncertainty owing to geopolitical tensions and tariff-related developments," Aditi Nayar, chief economist at ICRA, said.

Benefitting from robust government capital as well as revenue spending, upfronted exports to some geographies and nascent signals of improved consumption, the pace of expansion in economic activity in Q1 FY2026 is estimated at 6.7%, Nayar said.

Core GVA, which excludes agriculture and government services, is estimated at 6.1% in Q1FY26, compared to 6.7% in Q4FY25, according to Sengupta's estimates.

ICRA projects the pace of expansion in the agriculture, forestry and fishing GVA to moderate to about 4.5% in Q1FY26 from 5.4% in Q4FY25, while remaining robust, led by the healthy growth in the output of most rabi and summer crops.

Industrial GVA growth is expected to decline to 4% in Q1FY26 from 6.5% in Q4FY25, as per ICRA's estimates, with excess rainfall weighing upon the performance of the mining and electricity amid a strong base effect. While growth in manufacturing volumes decelerated in Q1FY26 on an annual basis, compared to Q4FY25, input costs reverted to the deflationary zone, which may have supported the profitability of listed players in certain sectors, explained Nayar, estimating manufacturing GVA growth to moderate slightly to 4% in Q1FY26 from 4.8% in Q4FY25.

Teresa John, chief economist at Nirmal Bang, also said that manufacturing sector growth is likely to benefit from improvement in corporate profitability and muted WPI inflation, estimating the sector to grow at a robust pace of 8% on an annual basis. However, sluggish mining and electricity production will act as a drag, John said.

Services, including construction, are likely to slow to 6.5% on an annual basis in Q1 FY26, down from 7.9% in Q4FY25, said John, while construction is likely to grow 7.5% on an annual basis in Q1FY26.

In terms of expenditure, growth will be supported by rural demand and government capital expenditure, according to high frequency indicators. Meanwhile, urban demand has likely remained weak, reflecting muted urban wage growth, said Sengupta.

Private corporate capex is also expected to remain tentative, given uncertainty on domestic and external demand, she said, adding that the drag from net imports is expected to be lower with a rise in the trade deficit balanced by higher services surplus.

The bilateral tariffs did not have a negative impact on exports, due to front-loading of exports to the US. Moreover, the tariffs on India were relatively lower as pause period existed. Tariff-induced uncertainty and still-lukewarm private capex mean that growth might ease in later quarters.