New Delhi: The Indian economy is expected to expand by nearly 7.5 percent in the second quarter of FY 26. The same can be achieved, supported by better rural consumption, strong investment activity, and GST impact, a research report by State Bank of India (SBI) has said.

It added that the growth is expected to continue, supported by manufacturing and services, apart from structural reforms. The report said that GST rationalise played a key role in the strong festive mood. "Based on the estimated model, we obtain a nowcast of real GDP growth of ~7.5% in Q2FY26 with the possibility of an upside surprise,” the report added.

It added, "In the continuum of the good numbers from festive-led sales, the percentage of leading indicators in consumption and demand across agriculture, industry, and services showing acceleration has increased to 83% in Q2 from 70% in Q1. Based on the estimated model, we obtain a nowcast of real GDP growth of about 7.5% in Q2FY26 with the possibility of an upside surprise.”

Various sectors indicated a clear acceleration

The report further noted that various sectors like industry, agriculture, and services have indicated clear acceleration. It added that the share of top indicators, which showed an increase in demand and consumption, increased by 83% in the second quarter, as compared to 70 percent earlier. The SBI research has placed the real GDP growth at around 7.5 percent in Q2 FY26, with the chances that the outcome would be stronger.

India’s outlook on macroeconomics

The report further noted that India’s outlook on macroeconomics remains one of cautious optimism, due to robust domestic demand and easing pressures on inflation. According to the research, the growth is likely to be witnessed due to strong investment activities, rural consumption recovery, and buoyancy in services and manufacturing. The GST 2.0 reforms are likely to boost private consumption and domestic demand in the country.