August 21, 2025
SBI’s nowcast model pegs GDP growth at 6.9% and GVA at 6.5% for the quarter
Growth for the full fiscal year is expected to ease to 6.3%, below the RBI’s target of 6.5%
SBI has lowered growth projections by 0.2 percentage points for Q2 to Q4 of FY26
The gap between real and nominal GDP growth has narrowed sharply due to low inflation
The Indian economy is estimated to have expanded between 6.8% and 7% in the first quarter of FY26, outpacing the Reserve Bank of India’s forecast of 6.5%, according to an assessment by the State Bank of India (SBI).
SBI’s nowcast model places real GDP growth at 6.9% year-on-year, with Gross Value Added (GVA) estimated at 6.5%. The bank’s analysis suggests the Q1 performance is consistent with recent quarterly trends and reflects stable underlying factors that support the medium-term growth trajectory.
However, the report expects GDP growth for the full fiscal year to moderate to 6.3%, below the RBI’s 6.5% projection. SBI has trimmed the RBI’s growth expectations by 0.2 percentage points for each of the remaining quarters of FY26.
The study also highlights the narrowing gap between real and nominal GDP growth. This difference, which stood at 12 percentage points in Q1 FY23, fell to 3.4 percentage points by Q4 FY25, and is projected to shrink further in Q1 FY26 due to unusually low inflation.
The anticipated decline in the GDP deflator suggests that nominal growth could ease to 8% in Q1 FY26, even as real growth remains strong in the 6.8–7% range. SBI cautioned that this narrowing gap may mask the ongoing slowdown in momentum.
Source: Times of India