Research Report

• The YoY expansion in economic activity, as measured by the ICRA Business Activity Monitor - an Index of high frequency indicators, eased marginally to 10.5% in August 2026 from 11.1% in July 2026, remaining in double digits. The slowdown was broad based, with the YoY performance of 11 of the 16 constituent indicators deteriorating between these months. Moreover, the YoY growth in the output of the core sector slowed to 4.8% in August 2026, amid a weaker YoY performance across six of the nine sub-sectors. 
• The early trends for September 2026 appear favourable, owing to low base of the inauspicious Shradh period and deferred retail activity before last year’s GST rate cuts, which along with deficient rains in the current month (auguring well for mining and construction) should support the overall growth performance in September 2026. Thereafter, the strong base owing to the GST rate rationalisation would optically dampen growth in Q3 FY2027, constraining the assessment of the strength of festive demand. Moreover, weak crop prospects and growing inflation risks may weigh on consumption demand in the second half of the fiscal.
  

Source: ICRA Research