The risk is less about supply availability and more about the landed costs of crude and inflation being passed to consumers. Dolat sees agriculture GVA slowing to 1.2 per cent YoY in FY27 if IMD’s forecast of 90 per cent of LPA monsoon under El Nino plays out, while softer Middle East demand could hit exports. ICICI flags weaker exports, rising input costs and potential El Nino disruptions as key headwinds, though private consumption and capex should keep growth above 6 per cent.
Also read: India’s GDP expands 7.7% in FY26; Q4 growth at 7.8%
The FY26 close was stronger than expected. Real GDP growth came in at 7.8 per cent YoY in Q4FY26, beating Dolat’s 6.9 per cent and consensus 7.3 per cent. For the full year, GDP grew 7.7 per cent YoY and GVA 7.9 per cent YoY — the strongest under the new series. Nominal GDP grew 9.1 per cent YoY in Q4 and 8.9 per cent YoY for FY26.
Real Private Final Consumption Expenditure accelerated to 7.7 per cent YoY in FY26 from 5.8 per cent YoY in FY25, supported by GST rationalisation, Rs 1 trillion income tax cuts, easing inflation and stronger rural demand. GFCF rose 8.2 per cent YoY vs 6.4 per cent YoY last year on higher government infrastructure spending and private capex. Q4 saw investment stay robust at 10.8 per cent YoY, while private and rural consumption remained resilient.
On the supply side, services led with 9.3 per cent YoY growth in FY26. Trade, transport, hotels and communication rebounded sharply to 11.0 per cent YoY on travel and logistics. Financial, real estate and professional services stayed steady at 10.4 per cent YoY. Manufacturing improved to 10.7 per cent YoY, though Dolat notes secondary sector GVA moderated to 7.4 per cent YoY in Q4 from 9.8 per cent YoY in Q3, reflecting supply disruptions in industrial inputs and energy. Agriculture GVA recovered to 3.6 per cent YoY in Q4 from 1.7 per cent YoY in Q3 on a good harvest, but Dolat expects it to soften if monsoon is sub-par.
Also read: FY26 growth higher than anticipated, shows India’s resilience: MoSPI Secretary
Dolat says Q4 likely captured only limited impact from the West Asian conflict as firms used inventories. The bigger challenge now is rerouting crude imports and absorbing higher landed costs. ICICI notes export growth softened marginally to 6.3 per cent YoY in FY26 while imports rose to 5.6 per cent YoY on stronger domestic demand and capital goods imports.
FY26’s 7.7 per cent growth gives policymakers a stronger starting point for FY27, but growth will be more cost-driven than supply-driven. Consumption and capex should stay supportive, but inflation and monsoon risks mean FY27 is likely to be slower than FY26’s finish.