India April-June GDP Growth Seen at 7.5%, Above RBI View: Barclays

India’s economic growth likely stayed strong in April-June, with GDP expected to expand 7.5% year on year and gross value added 7.7%, Barclays Research said in a note on Wednesday.

The forecast is above the Reserve Bank of India’s April-June GDP projection of 7.0%. The official data are due on August 31.

Barclays said high-frequency indicators generally improved in April-June compared with January-March, despite the overhang from the Middle East conflict. Of the 20 indicators tracked by Barclays, only seven showed slower year-on-year average growth in the quarter.

The slowdown was concentrated in sectors expected to be affected by the conflict, including petrol, diesel and LPG demand and fertiliser production, Barclays said. Steel production and two-wheeler production also slowed, though the latter remained robust.

Barclays said the impact of the Middle East conflict had been sharp but short-lived, affecting expected sectors rather than denting overall activity in a broad-based manner.

Barclays expects agriculture growth to slow because June marked one of the driest starts to the monsoon season on record. It also expects weaker coal, basic metals and natural gas output to weigh on mining GVA.

Manufacturing GVA is likely to improve in April-June, while utilities growth is also expected to be stronger than in the previous quarter. Construction growth may slow slightly, Barclays said.

Services activity is expected to remain firm, supported by stronger high-frequency indicators such as medium and heavy commercial vehicle sales, domestic passenger traffic, goods and services tax collections, bank credit and deposits, and government expenditure.

However, GST growth and subsidy outgo suggest net indirect tax growth may turn negative, implying GDP growth could be lower than GVA growth, the note said.

Barclays said revisions to earlier GDP and GVA readings need to be monitored as the next data release will incorporate revised industrial production and wholesale price series with base year 2022-23. The new wholesale price data will also be used as a deflator for several sectors.

The RBI raised its 2026-27 GDP growth forecast by 10 basis points to 6.7% at its August monetary policy meeting. Barclays expects full-year growth at 6.8%.

If April-June growth materially exceeds the RBI’s estimate and inflation remains broadly in line with projections until the October policy meeting, the balance of risks could tilt to the hawkish side, Barclays said. That could result in the RBI’s policy undertone moving from neutral towards restrictive, it said.