India’s economic growth rate is likely to remain strong in the third quarter of the current financial year 2025-26. According to a report by Union Bank of India, despite the adverse base effect, the country’s gross domestic product (GDP) growth rate may remain around 8.3 percent.
What factors supported GDP?
The report said that the increase in demand and economic activities after the GST rate cut has supported the growth. According to estimates, the GDP growth for the third quarter may be 8.3 percent, which is significantly higher than 6.4 percent in the same quarter last year. There are also signs of improvement in the gross value added (GVA) growth rate. According to the report, GVA growth in the third quarter is expected to increase to around 8.0 percent, which is more than 6.5 percent last year. However, it may be marginally lower than 8.1 percent in the second quarter.
What is the indication regarding nominal GDP growth rate?
The report also underlined that there may be some moderation in the nominal GDP growth rate. After being 8.7 percent in the second quarter, it is likely to decline to about 8.5 percent in the third quarter, whereas it was 10.3 percent in the same period last year. This decline in nominal growth is believed to be mainly related to the decline in the GDP deflator due to falling inflation. According to the report, the overall growth outlook for FY2026 still remains resilient and strong. Also, early indications suggest that the economic momentum may continue in FY 2027 as well. However, clarity on the final annual estimates will come only after the GDP base year revision proposed by the Ministry of Statistics and Program Implementation (MoSPI). It is noteworthy that MoSPI is going to release official GDP figures today with the revised base year 2022-23. This is expected to give a clearer picture of the growth trend and the overall impact of base year changes.
