India’s power demand to grow by 4-4.5% in FY26: ICRA

This forecast comes amid recent volatility, with a notable 5 per cent year-on-year decline observed in the first 20 days of October 2025, as per provisional data from the Power System Operation Corporation (POSOCO).
| Photo Credit:
REUTERSAMIT DAVE

Ratings agency ICRA projects India’s electricity demand to grow by approximately 4-4.5 per cent in FY26 as a strong recovery in the second half of the year is expected to offset the monsoon-related weakness seen in the first half.

Ankit Jain, Co-Group Head of Corporate Ratings at ICRA, said, “Following a muted 1 per cent growth in H1 FY26 due to an unfavourable base and an early monsoon, we foresee a robust recovery in H2.”

As weather patterns normalise and underlying economic activity remains stable, ICRA projects full-year electricity demand growth to settle at a healthy 4–4.5 per cent. The full-year projection, however, trails the GDP growth forecast of 6.5 per cent.

This forecast comes amid recent volatility, with a notable 5 per cent year-on-year decline observed in the first 20 days of October 2025, as per provisional data from the Power System Operation Corporation (POSOCO).

On the supply side, coal inventory levels at domestic power plants have moderated but remain comfortable. As of October 10, 2025, coal stocks were sufficient for 14.7 days of requirement, which is notably better than the stock levels witnessed in the corresponding periods of previous years. This reflects sustained improvements in coal supply and logistics management.

A significant highlight of the sector’s performance is the robust growth in the renewable energy segment. Driven by a strong project pipeline and consistent policy support from the Government of India, renewable energy generation surged by 24.8 per cent year-on-year during the first five months of FY26 (April-August 2025).

Published on October 27, 2025