New Delhi- After recording strong GDP growth of 7.8% in Q1 and 8.2% in Q2 of FY26, India is expected to maintain momentum and grow at over 7% in both Q3 and Q4, according to a research note released by SBI Research on Friday. The agency has projected overall GDP growth for FY26 at 7.6%.
SBI Research said, “Following GST rationalisation, robust festive spending and strong rural demand, with urban demand also improving, we expect more than 7% GDP growth in Q3FY26 and Q4FY26, and full-year growth of 7.6%.”
RBI Cuts Inflation Forecast
On Friday, the Reserve Bank of India (RBI) sharply reduced its inflation projection for FY26 to 2.0%, down from:
- 2.6% in October
- 4.2% in February 2025
This downward revision is driven by lower food inflation, better kharif output, healthy rabi sowing, and adequate water reservoirs.
The RBI’s estimates for:
- Q1 FY27 inflation are now 3.9%, down from 4.9% (June 2025)
- Q3 FY26 inflation is projected at 3.8%, down sharply to 0.6% as per the new forecast
SBI Research further projected inflation at 1.8% for FY26 and 3.4% for FY27, indicating room for future monetary policy adjustments.
Repo Rate & Monetary Policy
The RBI’s Monetary Policy Committee (MPC) on Friday unanimously cut the repo rate by 25 basis points to 5.25%, while maintaining a neutral stance. As a result:
- SDF rate: 5.0%
- MSF rate & Bank Rate: 5.5%
- CRR: 3%
SBI notes that the repo rate is likely to remain “lower for longer” given the inflation trajectory.
GDP Growth Outlook
The RBI also revised its Real GDP growth forecast for 2025–26 to 7.3%.
For FY27:
- Q1 growth is projected at 6.7%
- Q2 at 6.8%
However, the report also warns that global tariff and trade uncertainties may weigh on India’s external demand for goods and services.
With inputs from IANS