SBI Research Projects India Q2 GDP Growth at 7.8%, Surpassing RBI Forecast of 7.2%
India's economy is expected to sustain its brisk momentum in the second quarter of the financial year 2026-27 (Q2 FY27), with real Gross Domestic Product (GDP) growth projected at approximately 7.8%, according to the latest research report from SBI Research. The projection significantly outpaces the Reserve Bank of India's (RBI) revised forecast of 7.2% for the July-September period.
According to SBI Research's Dynamic Factor Model—which tracks 54 high-frequency indicators across agriculture, industry, and services—Gross Value Added (GVA) growth for the quarter is expected to hover between 8% and 8.2%. Nominal GDP growth, which factors in inflation, is forecast in the 11% to 11.5% range.
Divergence in Price Deflators and Sector Trends
The report estimated the overall GVA deflator at 4.1% and the GDP deflator at 3.4%. Notably, real manufacturing growth tracked higher than nominal figures because the manufacturing sector deflator remained negative.
Sectoral price movements exhibited divergent trajectories during the quarter:
- The agricultural deflator climbed to 6.4%, driven by farmgate price trends.
- The services sector deflator stood at 3.5%, reflecting stable domestic demand.
- Manufacturing input prices continued to outstrip output prices, indicating an incomplete pass-through of input cost pressures to end consumers.
The gap between input costs and selling prices remained particularly pronounced in sub-segments such as electrical equipment, computer, electronic and optical products, furniture, and fabricated metal products.
Banking and Corporate Health Remain Robust
On the corporate and financial front, strong credit expansion continued to underpin banking sector profitability. SBI Research highlighted that public sector banks (PSBs) performed better than private sector peers in managing asset quality metrics during the period.
Corporate performance also demonstrated underlying resilience. An analysis of roughly 2,300 listed domestic firms pointed to robust top-line momentum, helping mitigate headwinds stemming from sticky global commodity costs and uneven demand patches.
The RBI had previously revised its annual FY27 GDP forecast upward to 7.1% from 6.7% during its October Monetary Policy Committee meeting, assigning an estimate of 7.2% to Q2. The upbeat estimate from SBI Research signals that domestic economic activity may deliver a stronger-than-expected buffer against ongoing geopolitical volatility and global trade headwinds.
