New Delhi: India’s economy is estimated to have expanded at a robust pace of over 8% in the third quarter of FY26, supported by resilient high-frequency indicators and strengthening consumption trends, according to an SBI Research report released on Tuesday.
The report projects real GDP growth in Q3FY26 at around 8.1%, significantly higher than most other forecasts. The official data, incorporating a revised base year of 2022-23 in place of 2011-12, is scheduled to be released on February 27. The release will also include the second advance estimates for FY26, revised quarterly numbers for the first two quarters under the new base, and back series data for the past three financial years.
SBI Research said its assessment is based on tracking 50 leading indicators spanning consumption and demand, agriculture, industry, services and other macro variables. The share of indicators showing acceleration rose to 87% in the third quarter from 80% in the second quarter, indicating a broad-based pickup in economic momentum. The bank’s composite leading indicator, constructed using monthly data, also points to an upward trend in GDP growth during the quarter.
The report highlights that rural consumption remains strong, backed by favourable farm and non-farm activity. At the same time, urban consumption has shown a sustained uptick since the festive season, aided by fiscal stimulus measures. Together, these trends suggest that domestic demand continues to be the primary driver of growth, even as global conditions remain uncertain.
SBI’s projection is higher than most other forecasts, which place third-quarter growth between 7% and 7.2%, easing from 8.2% recorded in the July-September quarter. Meanwhile, several economists have avoided giving exact estimates, pointing to uncertainties linked to the recalibration of GDP data under the revised base year.
India’s statistical overhaul aims to better capture structural changes in the economy, including the expansion of digital commerce and services. Alongside the GDP base revision to 2022-23, the Consumer Price Index base has also been updated to 2024. The new methodology will incorporate more granular and contemporary data sources such as GST records, e-Vahan vehicle registrations, natural gas consumption data and improved measurement of the informal sector through quarterly QBUSE bulletins. According to SBI Research, these methodological enhancements could significantly alter historical growth estimates, making the direction and magnitude of revisions difficult to predict.
For the full FY26 fiscal, the first advance estimates had placed GDP growth at 7.4%. The latest Economic Survey, however, assessed India’s potential growth at around 7% and projected FY27 growth in the range of 6.8-7.2%. The second advance estimates due later this week are expected to provide greater clarity on the current year’s trajectory under the revised series.
Global Uncertainties
The SBI Research report notes that the global environment remains fraught with uncertainty. Global growth is projected at 3.3% in both 2025 and 2026, but remains uneven amid geopolitical tensions, elevated debt levels and structural shifts such as digitalization and decarbonization.
Adding to the uncertainty, recent developments in US trade policy could have wider implications. On February 20, the US Supreme Court invalidated the administration’s use of the International Emergency Economic Powers Act (IEEPA), 1977, to impose tariffs — a move unprecedented in peacetime. In response, the US executive invoked Section 122 of the Trade Act of 1974 to impose a temporary 10% global tariff on all imports for 150 days starting February 24, later raising it to 15%, the maximum permitted under the provision. While certain exemptions apply, including goods compliant with the USMCA and existing national security tariffs, the development underscores heightened trade policy volatility. Under Section 122, such measures can remain in force for up to 150 days unless extended by Congress. The administration is also expected to pursue tariffs under Sections 301 and 232 following further investigations.
Despite these global headwinds, India’s growth momentum appears intact, says the SBI Research report. It underscored that domestic demand resilience, improving high-frequency indicators and broad-based acceleration across sectors suggest that the economy may have delivered one of its strongest quarterly performances in recent years, even as the statistical framework undergoes a significant transformation.
On the banking front, the report observed that deposit growth at scheduled commercial banks remains relatively muted compared to credit growth. For the fortnight ended January 31, 2026, aggregate deposits grew by 12.5%, compared to 10.3% in the corresponding period of the previous fiscal year. Credit growth stood at 14.6%, up from 11.4% a year ago. While the rising credit-deposit ratio has widened the gap between deposit and credit growth, SBI Research noted that such divergences are not uncommon in the banking system.
In terms of profitability, public sector banks outperformed their private sector counterparts during the nine months ended December 31, 2025. Net profit of 12 public sector banks rose 12.5% year-on-year to ₹1.46 lakh crore. In contrast, net profit of eight major private sector banks grew by around 3% to over ₹1.30 lakh crore during the same period. The report described this as evidence of stronger performance by public sector lenders relative to major private banks in the current fiscal year.
Overall, while methodological revisions may reshape the statistical contours of India’s growth story, SBI Research’s assessment points to sustained economic resilience and a potentially stronger-than-expected expansion in the December quarter.