Rating agency Icra on Wednesday said India’s economy likely expanded in the range of 6.4-6.6 per cent in the first quarter (April-June) of FY27, despite elevated energy prices and limited input availability weighing on the margins of key sectors, after economic output exceeded expectations in the previous quarter.
In the fourth quarter (January-March) of FY26, real gross domestic product (GDP) grew 7.8 per cent.
Economic activity jumped to a 32-month high on a year-on-year (Y-o-Y) basis, according to the Icra Business Activity Monitor, registering 12 per cent growth in June 2026, up from 9.4 per cent in May. The index tracks 16 high-frequency indicators to gauge the economy’s health before the release of official GDP data.
“The uptick was broad-based, with as many as 13 of the 16 constituent indicators seeing an acceleration in their Y-o-Y growth rates,” the agency said.
The temporary US-Iran ceasefire, a 12-year-high rainfall deficit of 40 per cent in June 2026 that provided an extended period for construction and mining activities, and a low base across indicators were cited as likely reasons for the healthy growth in the economy, the report said.
Despite stronger-than-expected economic activity in Q1 FY27, the agency expects GDP growth to ease from the 7.8 per cent recorded in the previous quarter.
In the first quarter of FY27, the Icra Business Activity Monitor grew 10 per cent Y-o-Y, up from 9.1 per cent in the fourth quarter of FY26, as 10 of the 17 non-agricultural indicators registered Y-o-Y improvement between the two quarters.
Based on the revised Index of Core Industries, which showed core output growth accelerating to 5 per cent Y-o-Y in June 2026, the agency expects the Index of Industrial Production (IIP) to grow 5-6 per cent during the month.
Further, according to early data for July 2026, electricity demand grew 12.2 per cent between July 1 and 19, up from 10.9 per cent in June. This was “supported by higher temperatures amid deficient rains so far in the month”, the report said.
However, during the same period, vehicle registrations rose only 5 per cent Y-o-Y, compared with 23 per cent growth in June.
