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India's Economic Surge: SBI Projects 7.6% GDP Growth Amid Rate Cuts

SBI Research is bullish on India's economy, forecasting GDP growth to stay above 7 percent for the last two quarters of this financial year. They project the full-year FY26 growth to hit an impressive 7.6 percent. This optimism comes alongside the Reserve Bank of India cutting interest rates and sharply lowering its inflation estimates. However, the report notes that global trade uncertainties could still impact external demand.

Key Points: SBI Research Projects 7.6% GDP Growth for India in FY26

  • SBI Research projects robust GDP growth exceeding 7% for the third and fourth quarters of FY26
  • The full-year FY26 GDP growth forecast is set at a strong 7.6 percent
  • RBI has significantly reduced its inflation projection for FY26 to 2.0 percent
  • The central bank cut the repo rate by 25 basis points to 5.25 percent on Friday
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India's GDP to grow at over 7 pc in Q3-Q4, FY26 growth projected at 7.6 pc: SBI Research

SBI Research forecasts India's GDP to grow over 7% in Q3 & Q4, projecting 7.6% for FY26, as RBI cuts rates and revises inflation lower.

"We expect more than 7 per cent Q3FY26 and Q4FY26 GDP growth with full year growth of 7.6 per cent - SBI Research"

New Delhi, Dec 5

After witnessing a robust 7.8 per cent and 8.2 per cent gross domestic product (GDP) growth rate in first quarter and second quarter, respectively, of the current financial year (FY26), India to grow at a rate of over 7 per cent in the remaining two quarters (Q3 and Q4), and the overall FY26 growth is projected at 7.6 per cent, SBI Research said in note on Friday.

"After GST rationalisation, amid festive spending, rural demand remained robust and urban demand is recovering. We expect more than 7 per cent Q3FY26 and Q4FY26 GDP growth with full year growth of 7.6 per cent," SBI Research noted.

Earlier on Friday, considering continued lower food inflation, with higher kharif production, healthy rabi sowing, adequate reservoir levels and conducive soil moisture, the Reserve Bank of India (RBI) reduced the inflation projection for FY26 to 2.0 per cent from the October estimate of 2.6 per cent and February 25 estimate of 4.2 per cent.

The Q1FY27 estimates are now lower by around 100 basis points to 3.9 per cent from 4.9 per cent put out in June 2025. The Q3FY26 estimates at 3.8 per cent now stand at 0.6 per cent as per the new forecast.

"We forecast inflation for FY26 at 1.8 per cent and for FY27 at 3.4 per cent. With such an unprecedented level of downward revisions and further prospects of downward revision looming large, the RBI has kept the door ajar for future rate decisions," SBI Research said.

However, for now, the repo rate at 5.25 per cent will be lower for longer.

The RBI has also revised Real GDP growth for 2025-26, which is projected at 7.3 per cent now. Real GDP growth for Q1 FY2026-27 is projected at 6.7 per cent and for Q2 at 6.8 per cent.

However, ongoing tariff and trade policy uncertainties will impact external demand for goods and services.

On Friday only, the RBI MPC has unanimously decided to cut the repo rate by 25 bps to 5.25 per cent. The MPC also continue with the neutral stance. Consequently, the SDF rate shall stand adjusted to 5 per cent and the MSF rate and the Bank Rate to 5.50 per cent.

Cash reserve ratio (CRR) is at 3 per cent.

- IANS

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Reader Comments

P
Priya S
Good to see rural demand is robust. That's the real backbone of our economy. But I hope this growth is inclusive and reaches the farmers and small vendors, not just the big cities. The inflation projection coming down is a big relief for household budgets.
R
Rohit P
While the numbers look great on paper, I'm a bit skeptical. We hear these projections often. The key is sustaining this without inflation spiking again. Also, "trade policy uncertainties" is a concern. Need to see actual ground-level impact.
S
Sarah B
As an expat following India's economy, these are impressive figures. The inflation control to 2% is remarkable. The rate cut should make business loans cheaper. India is definitely a bright spot globally. Well done!
K
Karthik V
Festive spending and good monsoon are doing the trick! Lower inflation means more money in our pockets. Hopefully, the government uses this strong position to invest more in infrastructure and healthcare. Jai Hind!
M
Michael C
Respectfully, I think we should temper the excitement. Projections are one thing, reality is another. The article itself mentions external demand risks. Let's see if the manufacturing and export sectors can keep up this pace. A balanced view is necessary.

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