India’s economy is likely to have expanded at a stronger pace than expected in the first quarter of the current financial year, with growth estimated between 6.8% and 7%, according to an analysis by the State Bank of India (SBI).
The bank’s research team, using its nowcast model, projects real GDP growth of 6.9% year-on-year for the April–June 2025 period. Gross Value Added (GVA) for the same quarter is pegged at 6.5%. This is notably higher than the Reserve Bank of India’s (RBI) earlier projection of 6.5% for Q1 FY26.
“Initial estimates indicate that GDP growth in the first quarter of FY26 could range between 6.8% and 7%,” the report noted, adding that the performance is consistent with recent quarterly patterns and fits within the economy’s medium-term growth trajectory.
Despite the upbeat Q1 outlook, SBI expects growth to moderate over the rest of the fiscal year. The report forecasts GDP expansion of 6.3% for the full FY26, slightly below the RBI’s estimate of 6.5%, as projections for the remaining quarters have been revised down by 0.2 percentage points each.
The analysis also draws attention to the narrowing gap between real and nominal GDP growth. This difference, which had stood at about 12 percentage points in Q1 FY23, has steadily declined to 3.4 percentage points by Q4 FY25. For Q1 FY26, the bank expects the gap to shrink further due to subdued inflation and a weaker GDP deflator.
According to SBI, this convergence could mask signs of a slowdown in momentum, with nominal GDP growth expected to ease to around 8%, even as real growth remains relatively robust at close to 7%.