India’s GDP is set to hit 7.5% in the second quarter of FY25-26, the State Bank of India (SBI) predicts, fueled by Goods and Services Tax (GST) reforms and a surge in rural spending, the top state lender, State Bank of India (SBI) Research, said in its report on Tuesday.
Investment activity is picking up, rural consumption is recovering, and both services and manufacturing are showing strong momentum, SBI Research highlighted. Structural reforms like GST rationalisation have also sparked festive optimism, signaling a clear win for hope over hype, it added.
"In continuum of the good numbers from festive led sales, percentage of leading indicators in consumption and demand across agriculture, industry, service sectors showing acceleration has increased to 83% in Q2 from 70% in Q1. Based on the estimated model, we obtain a nowcast of real GDP growth of 7.5% in Q2FY26 with possibility of an upside surprise," the report underscored.
The Reserve Bank of India (RBI), the state monetary policy regulator, has forecast a growth rate of 7% in the second quarter of this financial year. If the SBI's projections come true, it would mark a significant uptick for the nation's economy.
Global financial institutions like the International Monetary Fund (IMF) and the World Bank have remained buoyant about India's growth despite friction between India and the US over a bilateral trade agreement, following Washington 50% tariff policy.
Both the IMF and the World Bank have backed India to attain a growth rate of at least 6.5% in the next two years.
The Indian economy grew by 7.8% in the first quarter of the current fiscal year, surpassing analysts' expectations.