India’s Q3 GDP Growth: What to Expect
Economists expect India’s Q3 GDP growth to remain above 7 per cent, supported by a pickup in consumption and investment. The second advance estimates of GDP, along with the Q3 growth numbers, will be released on Friday, using a revised base year of 2022-23.
High-frequency indicators, such as electricity demand and steel consumption, showed sequential moderation in the third quarter, at -0.2 per cent and 4.6 per cent, respectively. Cement production, however, rose 11.1 per cent in Q3 of FY26 compared with 7.3 per cent in Q2.
Key Economic Indicators
India’s merchandise exports and the Manufacturing Purchasing Managers’ Index (PMI) for both manufacturing and services also eased sequentially in Q3. However, proxy indicators, such as two-wheeler and domestic passenger vehicle sales, recorded growth of 20.9 per cent each in Q3 against 7.5 per cent and -1.53 per cent, respectively, in July-September FY26.
In the first half of FY26 (April-September), the economy grew by 8 per cent in real terms, following expansions of 7.8 per cent in Q1 and 8.2 per cent in Q2, the fastest pace in six quarters.
Economists’ Predictions
India’s economy is estimated to grow by 7.4 per cent in FY26, up from 6.5 per cent in FY25, according to the first advance estimates released by the National Statistics Office. The figures remain subject to revision, with the new 2022-23 base year coming into effect in February and actual trends for the remainder of the financial year becoming available.
Rating agency Icra has projected year-on-year (Y-o-Y) GDP growth to ease to 7.2 per cent in Q3. The reasons for the estimated sequential slowdown include an unfavourable base effect, contraction in government capital spending, subdued state government revenue expenditure, and weak merchandise exports.
The agency added that lower expansion in the services and agriculture sectors likely outweighed a pickup in the industrial sector, which reached a six-quarter high of 8.3 per cent in Q3 compared with 7.7 per cent in Q2.
Investment and Consumption
While domestic air passenger traffic in Q3 picked up 1.87 per cent, petrol and diesel consumption slowed to 3.97 per cent from 4.37 per cent in the previous quarter.
In the past two months, consumption growth has shown good momentum. There is traction in new investment announcements. Third quarter growth will be above 7 per cent according to our estimates.