With a slower pace of expansion in the services sector, rating agency ICRA has estimated India’s Gross Domestic Product (GDP) growth at a four-quarter low of 7 per cent in the April-June (Q1) quarter of the current fiscal year (FY27), down from 7.8 per cent in the March quarter of FY26. It projected the industrial sector to grow at 7.7 per cent, agriculture at 4 per cent and the services sector at 7.9 per cent in the June quarter.
The agency said high-frequency indicators across the industrial and services sectors showed a healthy picture of domestic volume growth in Q1FY27, despite concerns over the fallout from higher commodity prices during the quarter due to the West Asia conflict. It noted that business sentiment among services companies weakened materially in Q1FY27, with optimism declining to its lowest level in five years amid headwinds from the West Asia crisis and persistent wage-cost pressures.
Based on the assumption of an average crude oil price of $80-85 per barrel in FY27, ICRA expects real GDP growth to moderate to 6.7 per cent in FY27 from 7.7 per cent in FY26, with risks tilted to the downside amid continued tensions in West Asia and monsoon-related uncertainty. However, nominal GDP growth is projected to accelerate to a four-year high of 13 per cent in FY27 from 8.9 per cent in FY26, amid expectations of higher inflation readings.
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