India's economic growth is expected to decelerate in the third quarter of FY2026, with GDP growth moderating to 7.2 percent from 8.2 percent in the previous quarter, according to ICRA's latest projections. The slowdown is primarily driven by weakening performance in the services and agriculture sectors, despite an uptick in industrial output reaching a six-quarter high. Services growth is anticipated to ease to 7.8 percent while agricultural expansion is projected at 3.0 percent. The contraction in government capital expenditure, subdued merchandise exports, and unfavorable base effects are cited as key headwinds. However, strong festive season demand supported by GST rationalization is expected to keep growth above 7 percent for the quarter, providing some cushion against broader economic headwinds facing the nation.
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