India's GDP growth is projected to moderate to 7.2 percent in the third quarter of fiscal year 2025-26, down from 8.2 percent in the previous quarter, according to rating agency ICRA. The slowdown is primarily driven by weaker performance in services and agriculture sectors, which more than offset gains in industrial output. Services growth is expected to ease to 7.8 percent from 9.2 percent, while agriculture growth moderates to 3.0 percent from 3.5 percent. However, industrial performance reached a six-quarter high of 8.3 percent. The contraction in government capital spending and subdued merchandise exports contributed to the sequential slowdown, though festive season demand and GST rationalization helped maintain growth above 7 percent for the quarter.
