The Indian economy is expected to grow at 7.2 per cent during January-March quarter (Q4) of Fiscal Year 2025-26 (FY26), a research report by SBI said. Government will formally announce Q4 and FY26 growth numbes on May 29.

Q4 estimate by SBI research is bit lower than the advance estimates projection of 7.3 per cent, as made in February.

Noting that despite global headwinds, the report said the Indian economy has maintained strong growth momentum. “High-frequency activity data indicates resilient economic activity, with minor decline in Q4. Rural consumption remains strong, driven by positive signals from farm and non-farm activity. Supported by fiscal stimulus, urban consumption shows a consistent uptick since the last festive season,” it said.

The research team tracked 50 leading indicators in consumption and demand, agri, industry, service and other indicators, which indicate a slowdown in Q4 FY26 growth (as compared to Q3 FY26). “The percentage of indicators showing acceleration is 85 per cent in Q4, compared to 83 per cent in Q3,” it said.

For the full fiscal of FY26, the report expects growth at 7.5 per cent, while for FY27, it is likely at 6.6 per cent. “The rupee, weakened much in recent period through clouds over external macros, as also unabated speculative forces, needs structural changes on the BoP front streamlining the guard rails of import substitution, export competitiveness, integration in the global value chain,” the report said.

Further, it opined that a Resurgent Indian Diaspora Bond has to be calibrated suitably across Corpus (a smaller corpus may entice higher demands while signaling no panic vis-à-vis a higher corpus target), yield (optimal from deployment angle too), tenor (no hot money) and tax friendly treatment for investors upon maturity to ensure it does not end in a catch-22 situation.

Talking about credit growth, it found that this accelerated to 16.1 per cent in FY26, up from 11 per cent in FY25. While the total incremental credit growth was Rs 29.5 lakh crore, H1 credit growth was only Rs 5 lakh crore and H2 was Rs 24.5 lakh crore. With the consumption boost by Government through GST, credit continued to grow in H2FY26,” it said.

The same trend is continuing now, and credit grew by 16 per cent as of April 30, 2026. However, “we expect credit growth will remain robust during the H1FY27 and will decline in H2 due to a high base effect. The full year, credit growth is expected at 13-14 per cent. Domestic consumption is expected to hold GDP growth up, despite external crises, especially West Asia crisis,” it concluded.

Published on May 11, 2026