The National Statistical Office (NSO’s) First Advance Estimate (FAE) placed year-on-year (YoY) expansion in India’s GDP and GVA (at constant 2011-12 prices) at 7.4% and 7.3%, respectively in FY2026, in line with ICRA’s estimate for the fiscal, notwithstanding some differences in the sectoral estimates. Accordingly, it has implicitly pegged the GDP growth to moderate to 6.9% in H2 FY2026 from 8.0% seen in H1 FY2026. ICRA believes that a potential contraction in the Government of India’s (GoI) capital expenditure and the adverse impact of the US tariffs on merchandise exports across several sectors, along with an unfavourable base is likely to weigh on GDP growth in H2 FY2026 vis-à-vis H1.

NSO pegged GDP to grow by 7.4% in FY2026: The NSO’s FAE placed the YoY expansion in GDP and GVA at 7.4% and 7.3%, respectively in FY2026, in line with ICRA’s estimate for the fiscal, notwithstanding some differences in sectoral estimates. ICRA expects the growth in the industrial (NSO: +5.4%) and agricultural (+2.7%) sectors to fare somewhat better than the NSO’s implicit estimate for H2 FY2026, while services (+9.0%) growth is likely to trail the same.

?Implicit GDP growth of 6.9% for H2 FY2026 entails moderation from 8.0% in H1: The NSO expects the YoY GDP and GVA growth to decelerate to 6.9% and 6.8%, respectively, in H2 FY2026 from 7.9-8.0% in H1 FY2026. ICRA believes that a potential contraction in the GoI’s capex and the adverse impact of the US tariffs on merchandise exports across several sectors, along with an unfavourable base is likely to weigh upon growth in H2 FY2026 vis-à-vis H1.