The year-on-year (YoY) growth in economic activity, as measured by the ICRA Business Activity Monitor - an Index of high frequency indicators, eased marginally to 10.3% in December 2025 from 10.7% in November 2025. However, this moderation was not broad based, with as many as 10 of the 16 constituent indicators reporting an improvement in their YoY performance between these months including auto output, electricity generation, fuel consumption, and vehicle registrations. Overall, the momentum in economic activity remained quite healthy in Q3 FY2026, with a majority of non-agri indicators witnessing an improvement in their YoY performance relative to Q2, aided by the GST rate cuts, which coincided with the festive season, even as export growth slowed between these quarters. At present, ICRA pegs the GDP growth in Q3 FY2026 (at constant 2011-12 prices) at a healthy 7.0%, albeit softer than the 8.0% seen in H1 FY2026, partly owing to an unfavourable base and moderation in the Centre’s spending.

• Growth in ICRA Business Activity Monitor eased in December 2025, albeit remained in double digits: The YoY growth in the index slowed mildly to 10.3% in December 2025 from 10.7% in the previous month. This was not broad based, and was largely led by non-oil merchandise exports, domestic air passenger traffic, steel consumption, cement output, and GST e-way bill generation. As many as 10 of the 16 constituent indicators reported an improvement in their YoY growth rates, including auto production and vehicle registrations, aided by the GST rate cut, year-end offers, and advance buying ahead of expected price revisions in January 2026. Fuel consumption and electricity generation also supported the performance of the Index in December 2025.
• Core output growth at 4-month high in December 2025: The YoY growth in core output rose to a 4-month high of 3.7% in December 2025 from 2.1% in November 2025, although this was driven by only a handful of sectors,  including coal, steel, and electricity, while the remaining five sectors witnessed a deterioration in their performance between these months. Given the trends in core output and other high frequency indicators, ICRA expects the IIP growth to ease somewhat to ~4.5-5.0% in December 2025 from 6.7% in November 2025.

Source: ICRA Research