India’s gross domestic product (GDP) growth in the first quarter of the current financial year is estimated to be 8 per cent, according to a State Bank of India (SBI) Research report published on Tuesday. This estimate is higher than the Reserve Bank of India’s (RBI) own projection of 7 per cent.
“Robust consumption and demand indicators exhibit continued resilience of the Indian economy. Except for a few indicators, India’s industrial growth is quite satisfactory,” states the report. “Services sector, the largest contributor to economic growth, revealed that except freight and passenger traffic all are in favour of an impressive growth for Q1. Other miscellaneous indicators also corroborate with our 8 per cent growth numbers.”
SBI Research’s nowcasting model uses 54 high-frequency indicators across agriculture, industry and services, along with a Dynamic Factor model with time-varying parameters. Eighty-six per cent of these showed acceleration in Q1FY27, compared to 69 per cent in Q1FY26. The underlying momentum, hence, remains broad-based.
The report says government capital expenditure (capex) remains supportive. Capex spending by 20 states stood at 10.5 per cent of BE (Budget Estimate) in Q1FY27, against 10.9 per cent in Q1FY26.
SBI economists said credit continues to grow since Q2FY26. “SCBs (Scheduled Commercial Banks) credit growth accelerated to 17.7 per cent and deposits at 12.7 per cent for the fortnight ended 15 July 2026. As per current trends, in FY27, aggregate deposit is estimated to grow by 14.5-15 per cent, while credit growth is expected at 16-17 per cent,” states the SBI report. “Selected banks quarterly results indicate improvement in efficiency indicators across the banks.”
On the weather front, the report said monsoon conditions have improved from a nearly 40 per cent rainfall deficit in June to surplus and normal rainfall in the months of July and August, respectively, bringing the deficit down to around 12 per cent. Indian Ocean Dipole (IOD) could also offset the impact of El Niño to a certain extent. July data and monsoon progress suggest continued growth momentum for the second quarter as well, SBI Research states.
The report also cautions that the rupee depreciation, which breached 96 against the dollar before making a recovery and stabilising at the 95-95.5 level, needs to be kept at bay for financial stability concerns. It calls for stronger signalling and a policy response from the RBI.
