New Delhi [India], June 2 : India's real GDP growth is expected to come in at 7.3 per cent in Q4FY26, higher than 7.1 per cent in Q4FY25, supported by stronger growth in utilities and services, even as agriculture, mining, manufacturing and construction post slower growth, according to a research report by Bank of Baroda.
The report noted that MoSPI will release provisional Q4FY26 numbers and revised FY26 growth figures later this week. "As per the implied growth calculations, it is clear that real GDP in Q4FY26 is expected to come in at 7.3 per cent, up from 7.1 per cent in Q4FY25. This will be helped by pickup in growth in utilities and services segments," the Bank of Baroda report said. It added that "for Q4FY26, the economy is projected to grow at 7.2-7.3 per cent" as the data will now incorporate March 2026 fiscal account numbers and corporate results.
The key driver of the year-on-year uptick is utilities and construction. "In contrast, the sub-industry index of utilities and construction may get revised upwards. As per the implied growth, electricity industry is projected to report 2.7 per cent rise in growth, up from 2.1 per cent in Q4FY25. Given the beginning of intense heatwave conditions in the country in Mar'26, this number could be revised upwards," the report stated. It also pointed to construction holding ground: "Infrastructure companies reported 11.1 per cent rise in net sales (4.3 per cent in Q4FY25) and 20 per cent rise in PAT (-0.9 per cent). Therefore, construction sector growth can be revised upwards from estimated growth of 7.6 per cent in Q4FY26."
Services growth is also projected stronger in Q4FY26. "For services, overall growth is projected at 9.1 per cent (up from 6.8 per cent in Q4FY25), with growth across sub-segments estimated to rise," the report said. It flagged support from credit growth: "Bank credit growth in Jan-Mar'26 averaged at 14.3 per cent versus 11.2 per cent in Q4FY25 and deposit growth averaged at 11.7 per cent versus 10.4 per cent during the same period last year."
However, the report expects downward revisions in other segments due to the West Asia crisis that began in March 2026. "Agriculture, mining, manufacturing and trade, hotels, transport sectors may note some downward revisions," Bank of Baroda said. It highlighted cost pressures: "price of commercial LPG had increased by Rs 142.5/cylinder... price of bulk diesel rose by Rs 22/lt, and gas cuts were announced for almost all companies." Agriculture growth is projected to slow to 2.1 per cent from 3.8 per cent in Q4FY25, with mining falling to 1.7 per cent from 12.9 per cent and manufacturing moderating to 9.3 per cent from 11.8 per cent.
Looking ahead, the report expects FY27 growth at 6.5-6.8 per cent. "Going ahead for FY27, growth will be slightly lower at 6.5-6.8 per cent, as bulk of the impact of the US-Iran war will be felt in Q1FY27," it said, citing higher LPG, CNG, petrol and diesel prices and risks to monsoon and heatwave conditions.