The ongoing war in West Asia may not have dented the fourth quarter GDP growth as most analysts see the economy growing over 7% during the period. The government is set to release GDP data for both the final quarter of FY26 and the full fiscal year on Friday.
The analysts and economists indicated that while the West Asia crisis created some pressure during the final month of the fiscal year, its impact on overall growth remained limited in FY26. However, they cautioned that the trickle-down effects could become more visible in the coming quarters.
State Bank of India (SBI) has estimated Q4FY26 growth at around 7.2%, while FY26 growth could remain at about 7.5%. In its report, SBI projected India's GDP growth for FY27 at 6.6%.
Ratings agency ICRA expects growth to moderate more sharply to 7% in Q4FY26 from 7.8% in the previous quarter, citing slower manufacturing activity, contraction in exports, and emerging signs of pressure on corporate margins following developments in West Asia. It has projected full-year FY26 growth at 7.5%.
Indranil Pan, Chief Economist at YES Bank, said the impact of the West Asia conflict on growth would be relatively limited as the crisis affected only March, the last month of the fiscal year.
"Only March witnessed the impact of the West Asia crisis through higher oil and commodity prices. However, there was no pass-through of higher global oil prices to retail fuel prices, thereby protecting consumers. Thus, for the quarter, we see limited growth erosion due to the West Asia crisis, and this is also borne out by advance indicators on both the demand and production sides," Pan said.
YES Bank estimates Q4FY26 GDP growth at 7.4%. Rajni Thakur, Chief Economist at L&T Finance, said, "We expect the Q4 estimate to be around 7.2-7.3%, with the full-year growth estimate also broadly at 7.3%."
Thakur noted that March accounted for only one month at the tail end of the fiscal year. However, some impact was observed in sectors such as restaurants, trade, ceramics and certain high-technology industries. In addition, manufacturing activity was affected by disruptions such as gas shortages. Consequently, the March data are likely to reflect some signs of strain.
Bank of Baroda has projected Q4FY26 growth in the range of 7.2-7.3%, but warned that the larger impact of the geopolitical crisis may become visible in FY27.
