India’s Q3 FY26 GDP Growth Seen At 8-8.1% Amid Strong Domestic Demand: SBI Report

India’s economy is expected to maintain strong growth momentum, with GDP projected to expand by around 8 to 8.1 per cent in the third quarter of FY26, according to a research report by State Bank of India.

The report said the domestic economy has remained resilient despite global headwinds, supported by strong domestic demand and steady economic activity across sectors.

It stated "we expect Q3FY26 real GDP growth of closer to 8.1 per cent".

High-frequency activity data indicates resilient economic activity in Q3 FY26, covering the October to December 2025 period.

“Rural consumption remains strong, driven by positive signals from farm and non-farm activity. Supported by fiscal stimulus, urban consumption shows a consistent uptick since the last festive season,” said Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India.

What to expect from India’s Second Advance Estimates of GDP to be released on February 27?

According to the first advance estimates, India’s GDP is projected to grow at 7.4 per cent in FY26, with growth largely driven by domestic demand.

The report emphasised that domestic consumption continues to play a key role in supporting economic expansion despite uncertainties in the global economic environment.

The Second Advance Estimates of GDP for 2025-26, along with past three financial years’ GDP estimates and quarterly GDP estimates based on the new base year of 2022-23, are scheduled to be released on February 27.

Previous quarterly GDP figures for the first and second quarters are also expected to change due to the revision in the base year.

India is updating its GDP ase year from 2011-12 to 2022-23, with the new series aimed at better reflecting the current structure of the economy, including the growing role of digital commerce and the services sector.

How will the new GDP methodology and data sources impact India’s GDP estimates?

The overhaul includes better measurement of the informal sector and the use of more granular data sources such as GST records, e-Vahan vehicle registrations and information on natural gas consumption, potentially placing India as the world’s fourth-largest economy.

“Given significant methodological changes and new data series to be released, it is difficult to predict the extent of revision,” said the report.

In addition, the base year for the Consumer Price Index has been updated to 2024 to provide a more accurate measure of inflation based on current consumption patterns.

Recently, Sanjay Malhotra, Governor of the Reserve Bank of India, said the revision of the inflation targeting range following the CPI base year update is under examination and will be considered in the next policy.

"The revised framework would be taken into account in the RBI's next set of projections to be released during the April monetary policy," he said.

The report also noted that strong domestic demand, resilient consumption trends and ongoing economic activity continue to support India’s growth outlook even as the global economic environment remains uncertain, with global growth projected at 3.3 per cent in both 2025 and 2026 amid geopolitical tensions, high debt and structural shifts such as digitalisation and decarbonisation.

According to the latest Economic Survey, India’s potential GDP is estimated at around 7 per cent and is projected to grow in the range of 6.8 to 7.2 per cent in FY27.

(With inputs from ANI)