India's growth pegged at 7.2% for Q4 FY26
What's the story
The Indian economy is expected to grow by 7.2% in the January-March quarter (Q4) of the fiscal year 2025-26 (FY26), according to a research report by the State Bank of India (SBI). The formal announcement of Q4 and FY26 growth numbers will be made by the government on May 29. The SBI research estimate is slightly lower than February's advance estimate projection of 7.3%.
Economic resilience
Rural and urban consumption show steady increase
The SBI report highlights that despite global headwinds, the Indian economy has continued to show strong growth momentum. "High-frequency activity data indicates resilient economic activity, with minor decline in Q4," it said. The report also noted that rural consumption remains strong due to positive signals from both farm and non-farm activities. Urban consumption has also shown a steady increase since the last festive season, backed by fiscal stimulus measures.
Indicator tracking
Leading indicators suggest minor decline in Q4 FY26
The SBI research team tracked 50 leading indicators across consumption and demand, agriculture, industry, services, and other sectors. These indicators suggest a slowdown in Q4 FY26 growth compared to Q3 FY26. However, the report also noted that "The percentage of indicators showing acceleration is 85% in Q4, compared to 83% in Q3,". For the entire fiscal year of FY26, the report expects growth at 7.5%, while it is likely to be at 6.6% for FY27.
Credit analysis
Credit growth accelerated to 16.1% in FY26
The SBI report also highlights that credit growth has accelerated to 16.1% in FY26, up from 11% in FY25. The total incremental credit growth was ₹29.5 lakh crore, with H1 credit growth at just ₹5 lakh crore and H2 at ₹24.5 lakh crore. "With the consumption boost by Government through GST, credit continued to grow in H2FY26," it said, adding that this trend is continuing with a 16% increase as of April 30, 2026.
GDP projection
Nominal GDP growth for Q4 FY26 projected at 12.2%
On the nominal front, the SBI report estimates that the nominal GDP growth for Q4 of FY26 will be around 12.2%. For the fiscal year 2026-27, the nominal GDP is estimated at around 11%, assuming a deflator of about 4.5%. "We expect that the Nominal GDP growth will be around 12.2% for Q4FY26," said the report while projecting a real GDP of 7.2% for this period.