GDP – India Poised for Strong Q3 FY26 Economic Expansion
GDP- India’s economy is projected to record robust growth in the third quarter of the financial year 2025-26, with estimates suggesting an expansion of around 8 to 8.1 percent, according to a recent report by SBI Research. The assessment indicates that domestic demand and steady consumption patterns have helped sustain momentum even as global economic conditions remain challenging.
Economic Activity Signals Solid Performance
Data drawn from high-frequency indicators for the October to December 2025 quarter point to sustained strength across several sectors. The report highlights that economic activity has held up well, supported by consistent demand and stable investment trends.
Rural markets, in particular, have demonstrated resilience. Improved farm output and increased non-agricultural activities have supported spending in the countryside. At the same time, urban consumption has gained pace, aided by fiscal measures and a noticeable rise in spending since the festive season.
Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser at the State Bank of India, noted that both rural and urban demand have played a crucial role in maintaining the growth trajectory. According to him, fiscal support and positive signals from agriculture and allied sectors have strengthened overall consumption patterns.
Annual Growth Estimate and Domestic Demand
India’s gross domestic product for FY26 is currently projected to grow at 7.4 percent, based on the first advance estimates. The expansion is largely attributed to strong domestic demand, which continues to act as the primary driver of economic growth.
Despite uncertainties in the global environment, domestic consumption and investment activity have helped cushion the impact of external pressures. Analysts believe that the diversified structure of India’s economy has contributed to its relative stability.
Revision of GDP Base Year Underway
A significant statistical revision is also on the horizon. India is updating the base year for GDP calculations from 2011-12 to 2022-23. The revised data series is scheduled for release on February 27 and is expected to provide a more accurate representation of the current economic structure.
This update comes alongside a revision of the Consumer Price Index base year to 2024. The changes are intended to better capture shifts in the economy, including the rapid expansion of digital commerce and the growing contribution of the services sector.
Officials involved in the revision process have indicated that the new framework will incorporate improved methods to measure informal sector activities. Additionally, fresh data sources such as Goods and Services Tax collections will be integrated into the calculation process, potentially offering a clearer picture of economic output.
Enhanced Methodology and Data Sources
The upcoming GDP series will rely on more granular datasets. These include GST records, vehicle registration data from the e-Vahan platform, and information on natural gas consumption. By broadening the data base, policymakers aim to strengthen the reliability and transparency of national income estimates.
However, the SBI Research report cautioned that the scale of revision under the new methodology is difficult to anticipate. Given the substantial changes in data coverage and measurement techniques, the final figures could differ from previous assessments.
Along with the updated base year data, the government will release the Second Advance Estimates for FY26, as well as revised GDP figures for the past three financial years and quarterly estimates aligned with the new 2022-23 base.
Outlook for FY27 and Global Context
Looking ahead, the Economic Survey has estimated India’s potential GDP growth at around 7 percent. For FY27, growth is expected to range between 6.8 and 7.2 percent, reflecting a stable medium-term outlook.
On the global front, the economic landscape remains uncertain. Worldwide growth is projected at 3.3 percent for both 2025 and 2026. However, expansion is uneven across regions due to geopolitical tensions, elevated debt levels, and structural transitions such as digital transformation and decarbonisation efforts.
Even amid these global headwinds, India’s domestic demand-driven growth model appears to be providing a degree of insulation, positioning the country for continued economic progress in the coming quarters.