The bank warned that the converging gap could mask a slowdown in growth momentum, as authorities expect nominal GDP to reach only 8 per cent in Q1 FY26, even though real GDP maintains strength between 6.8 per cent and 7.0 per cent.
The Indian economy likely achieved a robust growth rate of 6.8–7 per cent in the first quarter of the current fiscal year, exceeding the Reserve Bank of India’s projection of 6.5 per cent, according to State Bank of India (SBI) analysis, cited by ANI.
SBI’s assessment estimates GDP growth at 6.9 per cent for Q1 FY26, while Gross Value Added (GVA) stands at 6.5 per cent.
The bank’s nowcast model confirms real GDP growth at 6.9 per cent year-on-year for the reference period.
“Initial estimates showcase Q1 FY26 GDP could be approximately 6.8–7.0 per cent,” the report stated.
Analysts noted that this projection aligns with previous quarterly patterns and reflects steady underlying economic progress.
Despite strong performance in Q1, SBI expects GDP growth at 6.3 per cent for FY26, below the RBI’s target of 6.5 per cent.
The bank has reduced RBI’s growth projections by 0.2 percentage points for Q2 through Q4, citing moderation in momentum in the upcoming quarters.
SBI highlighted a shrinking gap between real and nominal GDP growth, which fell from 12 percentage points in Q1 FY23 to 3.4 percentage points by Q4 FY25. The report projects a further reduction in Q1 FY26 due to unusually low inflation levels.
The bank warned that the converging gap could mask a slowdown in growth momentum, as authorities expect nominal GDP to reach only 8 per cent in Q1 FY26, even though real GDP maintains strength between 6.8 per cent and 7.0 per cent.
SBI’s analysis suggests that India’s economy started FY26 on a strong note, but growth moderation may appear in subsequent quarters.
Analysts said monitoring inflation trends and the real-nominal GDP gap will remain crucial for fiscal and monetary planning.
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