ICRA projects India’s electricity demand to grow by approximately 4.0-4.5 per cent in FY2026. A strong recovery in the second half of the year is expected to offset the monsoon-related weakness seen in the first half.
Mr. Ankit Jain, Vice President & Co-Group Head – Corporate Ratings at ICRA, commented, “Following a muted 1% growth in H1 FY2026 due to an unfavourable base and an early monsoon, we foresee a robust recovery in H2. As weather patterns normalize and underlying economic activity remains stable, we project full-year electricity demand growth to settle at a healthy 4.0–4.5%.” 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% 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 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% year-on-year during the first five months of FY2026 (April-August 2025).
About ICRA:
ICRA Limited is one of India’s premier credit rating agencies, offering a comprehensive range of rating services and research solutions across corporate, financial institution, and structured finance sectors. With a commitment to integrity and analytical rigor, ICRA empowers market participants with insights for informed financial decisions.
