India's Economic Growth at 6.8-7.0% in FY26 Q1: SBI Report

• 23 Aug 2025
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According to a State Bank of India (SBI) analysis, the Indian economy may have registered a strong growth at around 6.8-7.0% in the first quarter of the present financial year. This estimate is significantly higher than the Reserve Bank of India's prediction of 6.5%.

According to the assessment, cited by ANI, GDP growth for the quarter stands at 6.9 percent, while Gross Value Added (GVA) is estimated at 6.5 percent. The State Bank of India's (SBI) nowcast model predicts real GDP growth at 6.9 percent year-on-year for the reference period. The report stated, “Initial estimates showcase Q1 FY26 GDP could be at approx. 6.8 per cent-7.0 per cent."

The report notes that this forecast aligns in a statistical way with trends observed in previous quarters, as the underlying factors contribute to persistence as well as smooth adjustment. This anchors the present projection within the medium term growth path that is suggested by the model. 

However, when we talk about the entire financial year FY26, the report forecasts GDP growth at 6.3 percent. This growth falls short of the Reserve Bank of India's full-year target of 6.5 percent. 

SBI has adjusted the RBI's GDP growth projection downward by 0.2 percentage points for the second to fourth quarters of FY26. The report also addresses the narrowing gap between real growth and nominal GDP growth. 

In Q1 of FY23, this gap was as wide as 12 percentage points but it has decreased significantly to 3.4 percentage points in Q4 of FY25. For Q1 in FY26, the report anticipates that this gap will become more narrow going further as inflation remains historically low. With an expected reduction in the GDP deflator, the difference between real and nominal GDP growth is likely to decrease. 

SBI notes that this tightening of the gap could obscure the current slowdown in growth momentum. Consequently, nominal GDP could decrease to 8 percent in Q1 FY26, even though real GDP growth is projected to remain strong in the range of 6.8 percent to 7.0 percent.

Source: NDTV