India's Q3 GDP growth to touch 7.2%, says ICRA
22 Feb 2026

ICRA, a leading rating agency, has projected India's year-on-year (YoY) GDP growth to moderate at 7.2% in the third quarter (Q3) of FY2025-26.

This is a decline from the 8.2% recorded in Q2 of the same fiscal year.

The slowdown is mainly attributed to slower growth rates in the services and agriculture sectors, despite an uptick in industrial performance during this period.

Sector-wise growth projections
Sector analysis

The services sector is expected to grow at a slower pace of 7.8% in Q3 FY2025-26, down from 9.2% in the previous quarter.

Similarly, the agriculture sector's growth rate is projected to slow down to 3%, from 3.5%.

However, the industrial sector is expected to witness a six-quarter high growth rate of 8.3% during this period, up from 7.7% in Q2 FY2025-26.

Key factors influencing GDP growth estimates
Economic factors

Aditi Nayar, Chief Economist at ICRA, said estimating GDP growth with the new base year is difficult.

She explained that the outlook for Q3 has been anchored to the current GDP dataset across sectors of the economy.

The projected slowdown is due to an unfavorable base effect, a contraction in government capital spending, subdued state government revenue expenditure and weak merchandise exports.

Government capital expenditure and GVA contraction
Spending trends

ICRA estimates the YoY growth in services gross value added (GVA) to moderate at 7.8% in Q3 FY2025-26, down from 9.2% in Q2 FY2025-26.

This is due to lower government spending and services exports expansion.

The report also notes that after a strong frontloading in H1 FY2025-26, the Government of India's gross capital expenditure contracted by 23.4% during this period, despite a high base effect.