The CareEdge Economic Meter (CEM), based on more than 40 high-frequency indicators, projected India’s GDP growth between 6.8 per cent and 7 per cent in Q4 FY26, while gross value added (GVA) growth was estimated at 7.2 per cent.
India’s GDP growth is projected at 6.8-7 per cent in Q4 FY26 despite geopolitical tensions and weaker external demand, according to CareEdge Ratings.
The economy remained partly insulated as firms relied on inventories and delayed energy cost pass-throughs.
Manufacturing growth moderated, while exports weakened.
CareEdge warned of slower momentum in Q1 FY27 due to the West Asia crisis.
It noted that the first two months of the quarter remained relatively unaffected by the conflict, helping cushion the impact on growth. Companies also relied on existing inventories, while the government and oil marketing companies absorbed a large share of rising energy costs before passing them on to consumers, CareEdge Ratings said in its latest economics report.
The quarter initially benefited from improving global trade conditions, including progress on the India-European Union trade agreement and an interim reciprocal trade framework between India and the United States that reduced tariff rates from 50 per cent to 18 per cent.
However, the external environment deteriorated towards the end of February as geopolitical tensions intensified in West Asia. Disruptions in the Strait of Hormuz triggered a sharp rise in global energy prices, adversely affecting India due to its heavy dependence on energy imports.
CareEdge estimated India’s oil and gas import dependence at around 4.2 per cent of GDP, with nearly 2 per cent linked to West Asia.
The manufacturing sector was expected to slow sharply in Q4 FY26, with growth easing to 8.7 per cent from 9.7 per cent in the previous quarter. Non-petroleum, non-agricultural exports contracted by 0.7 per cent compared with 3.2 per cent growth in Q3 FY26. Manufacturing indicators also weakened, with IIP manufacturing growth slowing to 5.1 per cent from 6.3 per cent.
The services sector was projected to grow 8.5 per cent in Q4 FY26, lower than 9.5 per cent in Q3 FY26.
On the expenditure side, private final consumption expenditure growth was expected to ease to around 7 per cent from 8.7 per cent in the previous quarter, reflecting weaker urban demand amid slower IT sector hiring.
Investment activity also weakened as central government capital expenditure contracted sharply in Q3 FY26 and recorded only modest growth during the first two months of Q4. Rising geopolitical uncertainty and global risk-off sentiment further affected private sector investment plans.
CareEdge warned that growth momentum could weaken further in Q1 FY27 as the impact of the West Asia crisis spreads across sectors. The agency also flagged potential downside risks from El Nino conditions and elevated input costs for agriculture.
It projected India’s GDP growth at 6.7 per cent in FY27, assuming an early resolution of the West Asia crisis and average crude oil prices of $90 per barrel.
Fibre2Fashion News Desk (SG)
