SBI sees Q3 FY26 GDP growth above 8%, flags impact of new base revision

India’s economic growth likely accelerated to above 8% in the October-December quarter of the current fiscal year, led by resilient domestic demand and an uptick in rural consumption, a report by State Bank of India (SBI) Research said.

In its latest nowcast report dated February 24, SBI Research estimated real GDP growth for Q3 FY26 at 8.0-8.1% year-on-year, with gross value added (GVA) also seen in a similar range .

The report nowcasts real gross domestic product (GDP) growth for the third quarter of fiscal 2025-26 at 8.0-8.1% year-on-year, compared with 8.2% in the preceding quarter, citing a broad-based improvement in high-frequency indicators .

“Overall, we expect Q3FY26 real GDP growth of closer to 8.1%,” the report said. “Given significant methodological changes, it is difficult to predict the direction of revision.”

India’s official second advance estimates for 2025-26, along with revised quarterly data based on a new base year of 2022-23, are scheduled for release on February 27.

The report said that high-frequency indicators point to a significant jump in economic activity during the quarter.

SBI said it tracks 50 leading indicators across consumption and demand, agriculture, industry and services. The share of indicators showing acceleration rose to 87% in the third quarter from 80% in the previous quarter.

India is shifting its GDP base year from 2011-12 to 2022-23 to better reflect structural changes in the economy, including the rise of digital commerce and improved measurement of the informal sector.

The new methodology will incorporate granular data sources such as GST records, e-Vahan vehicle registrations and updated price indices, and will move towards double deflation in manufacturing for more accurate constant price estimates .

According to SBI Research, the nowcast is based on a Dynamic Factor Model using around 20 core high-frequency indicators selected through machine learning techniques from a panel of 41 variables .

Rural consumption showed signs of improvement during the quarter, with a pick-up in the proportion of accelerating indicators for both rural and urban demand, the report said . Tractor and two-wheeler sales growth also strengthened, pointing to improving demand conditions.

For the full fiscal year, SBI estimates growth in the range of 7.7-7.8%, slightly higher than the government’s first advance estimate of 7.4% .

The report noted that while India’s economy remains resilient, the global backdrop is uncertain. It highlighted a recent move by the United States administration to impose a temporary global tariff of up to 15% on imports for up to 150 days, which could weigh on global trade flows .