New Delhi, Aug 21 India’s GDP is expected to grow between 6.8 per cent-7 per cent in the first quarter this fiscal (Q1 FY26), due to higher discretionary spending which will drive demand-led growth in the country, a report said on Thursday.
The gross value added (GVA) growth is estimated at 6.5 per cent for the quarter, SBI Research said, adding that the gap between real and nominal growth will significantly narrow in Q1 FY26.
The peak elasticity of government capital expenditure to GDP has reached 1.17, making it imperative for private investment to support public capital expenditure for sustainable growth, according to the State Bank of India’s research arm.
“A major source of concern for sustainable growth is the muted private capex. We believe that numbers may further decline as US tariffs may significantly impact the capex. Private investment must complement public investment to take the economy onto an even higher sustainable growth path,” the report noted.
The global economy has continued to hold steady, but the composition of activity points to distortions from tariffs rather than underlying robustness, the report added.
The International Monetary Fund (IMF) has revised upwards the global growth projections to 3 per cent for 2025 and 3.1 per cent in 2026 reflecting primarily front-loading ahead of tariff materialisation. Further, it revised upwards India's growth estimation by 20 bps to 6.4 per cent and China's by 80 bps to 4.8 per cent.
During the quarter, Indian Inc., which has approximately 4,300 listed entities, reported 4.7 per cent growth and 6.7 per cent EBIDTA growth, compared to 11 per cent EBIDTA growth the previous quarter.
SBI Research found that due to the fresh resumption of tariffs on Indian exports, the earnings outlook is likely to be negative for the next two quarters.
However, GST 2.0 can give a fillip to the consumption-orientated sector and offset the impact, it noted.
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