Indian Economy Grows 6.8-7% in Q1 FY26, Surpasses RBI Forecast: Report

The Indian economy is estimated to have grown at a robust rate of 6.8–7 per cent in the first quarter of the current fiscal year, surpassing the Reserve Bank of India’s (RBI) projection of 6.5 per cent, according to an analysis by the State Bank of India (SBI).

The SBI assessment, places GDP growth at 6.9 per cent for Q1 FY26, with Gross Value Added (GVA) estimated at 6.5 per cent. The bank’s nowcast model projects real GDP growth at 6.9 per cent year-on-year for the quarter. “Initial estimates indicate that Q1 FY26 GDP could be approximately 6.8–7.0 per cent,” the report stated.

The analysis suggests that these growth patterns align with historical quarterly trends, supported by underlying economic factors that sustain steady progression. This positions the current estimate comfortably within the model’s medium-term growth trajectory.

However, SBI projects the full-year GDP growth for FY26 at 6.3 per cent, slightly below the RBI’s target of 6.5 per cent. The bank has revised the RBI’s growth forecasts down by 0.2 percentage points for Q2 through Q4 of FY26.

The report also highlights a notable reduction in the gap between real and nominal GDP growth. This difference, which stood at 12 percentage points in Q1 FY23, fell to 3.4 percentage points by Q4 FY25, and is expected to shrink further in Q1 FY26 due to unusually low inflation. A declining GDP deflator is expected to narrow the distinction between real and nominal growth.

SBI warned that this convergence might mask a slowdown in growth momentum. As a result, while real GDP is estimated to remain strong at 6.8–7.0 per cent in Q1 FY26, nominal GDP growth could moderate to around 8 per cent.

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