India’s FY26 GDP Growth Seen At 7.6% After Strong Q2 Print: SBI Ecowrap

GDP Outlook Raised to 7.6% After 8.2% Q2 Jump; Domestic Demand Drives Growth: SBI Ecowrap

India’s GDP growth forecast is set to remain at 7.6 per cent, up from the earlier estimate of 7.5 per cent, after a solid 8.2 per cent expansion in Q2, the highest in six quarters, according to the latest SBI Ecowrap report. GDP growth will be 7.5–7.7 per cent in Q3 and 7.0 per cent in Q4 FY26, the report added.

With a 7.6 per cent real GDP growth projection for FY26, India’s GDP is likely to cross $4 trillion by March 2026 and $4.4 trillion by FY27, putting the economy on the right track to reach $5 trillion by March 2029, the report added.

India’s economy grew 8.2 per cent in Q2 FY26 compared to 5.6 per cent in Q2 FY25, as per official data released on November 28, 2025. Nominal GDP expanded 8.7 per cent in Q2 FY26, higher than 8.3 per cent in the same quarter last year. The gap between real and nominal GDP, which was as high as 12 percentage points in Q1 FY23, narrowed sharply to 0.5 percentage points in Q2 FY26. Manufacturing and services drove the strong performance, growing 9.1 per cent and 9.2 per cent respectively.

India’s GDP growth remains largely domestically driven, supported by services exports, low inflation and value-added expansion in labour-intensive sectors, the report said.

Incremental MSME credit is projected to cross Rs 6.4 lakh crore this year — 5.5 times the 16-year average — signalling stronger credit flow to smaller businesses and a broader economic recovery.

Q2 demand was anchored in private consumption, which grew 7.9 per cent, while capital formation rose 7.3 per cent. Exports grew 5.6 per cent, showing a sequential moderation but a year-on-year improvement, indicating a mixed trend in external demand, the report noted.

“The expenditure side trends show robust demand supported by two factors. First, a broad deceleration in prices is reflected in contractionary trends in GDP deflators, and second, good performance in labour-intensive sectors such as agriculture, manufacturing, construction and services like personal and financial services. The growth in change in stock also suggests strong demand trends,” SBI Ecowrap said.

Rise in Corporate Performance & Investment Momentum

SBI Ecowrap highlighted that Indian corporates reported stronger Q2 earnings than market expectations, easing concerns of a slowdown.

Around 4,000 listed companies reported 6.8 per cent revenue growth, while EBIDTA and profit after tax (PAT) rose 7.7 per cent and 33 per cent respectively in Q2 FY26 compared to Q2 FY25.

Major sectors contributing to the growth included Aerospace and Defence, Automobiles, Capital Goods, Cement, Diamonds, Gem and Jewellery, Fertilisers, Non-Ferrous Metals and Steel. Overall EBIDTA margin improved by 41 basis points, rising from 14.4 per cent in Q2 FY25 to 14.81 per cent in Q2 FY26. The results were driven by strong performance in commodity-linked sectors and improved consumption supported by tax and GST rationalisation.

Investment sentiment also strengthened, with new project announcements rising 80 per cent in the first half of FY26 to Rs 35.8 trillion. Private sector announcements accounted for 70 per cent of the total.