Research Report

To assess how the economic momentum is unfolding in Q3 FY2026, ICRA has assessed the average growth trends of high frequency indicators in October-November 2025. As per this, eight of the 18 indicators have witnessed a higher YoY growth in October-November FY2026 compared to Q2 FY2026, amid the festive-related boost to sectors like automobiles (wholesale + retail), domestic air travel, and non-food bank credit. However, 10 indicators witnessed a deterioration in this period, including electricity generation, mining output, non-oil exports and steel consumption, partly impacted by unseasonal rains in October 2025, and steep US tariffs. Overall, ICRA forecasts the GDP expansion to print at 7.4% in FY2026 (+6.5% in FY2025). With a projected softening in the CPI (to +2.0%) and WPI (to +0.4%) inflation in FY2026, vis-à-vis FY2025, the nominal GDP growth is expected to moderate to 8.5% in FY2026 from 9.8% in FY2025, in contrast with the uptrend expected in real GDP growth. While the tone of December 2025 MPC minutes is dovish, the evolving inflation-growth outlook and the fiscal measures unveiled by the FY2027 Union Budget, will guide the MPC's next decision. ICRA currently expects a pause in the MPC's February 2026 policy review.

EXHIBIT: YoY performance of high frequency non-agri indicators in Q2 and October-November FY2026

Source: CIL; Ministry of Commerce, GoI; Indian Railways; Indian Ports Association; JPC; RBI; PPAC; CMIE; PPAC; CEA; GSTN; DGCA; Ministry of Road Transport and Highways; CEIC; ICRA Research