India’s Q3 FY26 GDP Growth Projected Above 8% by SBI Ahead of Official Figures

India’s economy is estimated to have grown by over 8 per cent during the third quarter period that ended December 31, 2023, according to a research report released by the State Bank of India (SBI) on Tuesday. The projection indicates robust economic activities and precedes the formal release of official data by the Statistics Ministry on Friday.

The SBI report forecasts real Gross Domestic Product (GDP) growth for the period, which it referred to as ‘Q3FY26’, to be ‘closer to 8.1 per cent’. This estimate, described as higher than other projections, is attributed to resilient economic activity, with rural consumption remaining strong due to positive signals from farm and non-farm sectors. Urban consumption also showed a consistent uptick, supported by fiscal stimulus. The report indicated that 87 per cent of 50 tracked leading indicators across various sectors showed acceleration in Q3, compared to 80 per cent in the preceding quarter.

Other financial institutions and economists have offered more conservative estimates for the quarter. Rating agency ICRA has pegged Q3 growth at 7.2 per cent, a moderation from 8.2 per cent in the July-September quarter. In December, the Monetary Policy Committee of the Reserve Bank of India had projected real GDP growth for the third quarter at 7 per cent. Several other economists declined to provide estimates, citing uncertainty surrounding the recalibrated dataset.

Official Data Release and Methodological Changes

The Statistics Ministry is scheduled to release the official Q3 growth data on Friday. This release will utilise a new base year of 2022-23, replacing the previous base year of 2011-12. The SBI report noted that given these significant methodological changes, predicting the direction of revision is challenging. Alongside the Q3 figures, the second advance estimates for the current fiscal year (FY26) and previous two quarter numbers based on the new base year will be released, as will back series data for the past three years.

Earlier projections for India’s economic growth include a first advance estimate of 7.4 per cent for the current fiscal year. The Economic Survey had previously indicated a potential growth rate of around 7 per cent, with estimates for FY27 ranging between 6.8 and 7.2 per cent.

Banking Sector Performance

The SBI research report also highlighted the performance of the banking sector, noting that public sector banks (PSBs) outperformed major private sector banks during the nine-month period ending December 31. The net profit of 12 public sector banks grew by 12.5 per cent, reaching ₹1.46 lakh crore. In comparison, eight major private sector banks recorded approximately 3 per cent growth in net profit, totalling over ₹1.30 lakh crore during the same period.

Regarding Scheduled Commercial Banks (SCBs), the report indicated that deposit growth remained muted compared to credit growth. For the fortnight ended January 31, aggregate deposits grew by 12.5 per cent, up from 10.3 per cent in the corresponding period of the previous fiscal year. Credit growth stood at 14.6 per cent, compared to 11.4 per cent earlier. The report observed an increase in the gap between deposits and credit growth, acknowledging that such gaps are not unprecedented within the banking system.