SBI Projects India’s Q3 FY26 GDP Growth at 8.1% Amid Robust Domestic Demand

India’s economy is expected to sustain strong growth momentum in the third quarter of the current financial year (FY26), with the GDP projected to expand by around 8.1 per cent, according to a report released by the State Bank of India (SBI). The report noted that despite global economic headwinds, India’s economy has demonstrated resilience, supported by robust domestic demand and steady activity across multiple sectors. “We expect Q3 FY26 real GDP growth of closer to 8.1 per cent,” the report stated. High-frequency economic indicators suggest sustained economic activity during the third quarter of FY26. Rural consumption has remained strong, aided by positive developments in both farm and non-farm activities. Simultaneously, urban consumption has shown steady improvement, supported by fiscal stimulus and higher spending since the last festive season. According to the first advance estimates, India’s GDP is expected to grow at 7.4 per cent for the full fiscal year FY26, with the growth primarily driven by domestic demand. The SBI report emphasized that domestic consumption continues to be a critical factor supporting economic expansion, even amid global uncertainties. The report also highlighted that the second advance estimates of GDP for FY26 are scheduled to be released on February 27, 2026. These estimates will incorporate additional data and revisions, which may affect previous quarterly GDP figures for Q1 and Q2 due to changes in the base year. India recently updated its GDP base year from 2011-12 to 2022-23, with the revised series to be released on February 27, 2026. The SBI report noted that, given the significant methodological changes, predicting the direction of revisions in GDP data is challenging. The base year revision aims to more accurately reflect the current structure of the Indian economy, including the increasing role of digital commerce and the services sector. In addition, India has updated the base year for the Consumer Price Index (CPI) to 2024 to provide a more accurate measure of inflation based on current consumption patterns. RBI Governor Sanjay Malhotra recently stated that a revision of the inflation targeting range following the CPI base year update is under review and will be considered in the next monetary policy cycle. “The revised framework would be taken into account in the RBI's next set of projections to be released during the April monetary policy,” he added. The SBI report concluded that strong domestic demand, resilient consumption trends, and ongoing economic activity continue to underpin India’s growth outlook, despite ongoing global economic challenges.