The year-on-year (YoY) expansion in economic activity, as measured by the ICRA Business Activity Monitor - an Index of high frequency indicators, jumped to a 32-month high of 12.0% in June 2026 from 9.4% in May 2026. The uptick was broad based, with as many as 13 of the 16 constituent indicators seeing an acceleration in their YoY growth rates between these months. This likely reflects some favourable impact of the temporary ceasefire between the US and Iran on domestic activity, the large rainfall deficit of 40% in June 2026 (steepest in 12 years) that offered extended period for construction and mining activities, and a low base across some indicators. Given better-than-expected volume performance in June 2026 and Q1 FY2027 as a whole, ICRA currently projects the GDP to grow by a healthy 6.4-6.6% in Q1 FY2027. However, this is weaker than 7.7% in Q4 FY2026 and reflects the impact of high energy and commodity prices and limited availability of inputs on the margins of some sectors.

• Growth in ICRA Business Activity Monitor at 32-month high 12.0% in June 2026: After a gap of 3 months, economic activity, as measured by ICRA Business Activity Monitor displayed a double-digit YoY expansion of 12.0% in June 2026 (+9.4% in May 2026) – this is highest growth print in last 32 months.
  
  
• Newly-published core data revealed 5-month high growth of 5.0% in June 2026: The Office of Economic Adviser, Government of India, recently published new data on the index of core industries with base year 2022-23, entailing inclusion of iron ore given its extensive use in the industrial sector. The combined weight of the 9 core industries is 32.9% of IIP with base 2022-23, as against 40.3% in the old IIP series. The YoY growth in core output rose to a 5-month high of 5.0% in June 2026 from 3.2% in May 2026, albeit led by just four of the nine sectors, including coal, iron ore, refinery and cement output. ICRA expects the IIP growth to print at 5-6% in June 2026 (+5.1% in May 2026).