Despite global growth headwinds, India’s economic resilience remains strong, with October data showing a sharp rise in consumption driven by festive demand and GST reforms, according to SBI Capital Market’s latest EcoCapsule report.
The investment banking arm of the State Bank of India noted that this signals a clear turnaround in demand after a subdued monsoon quarter, supported by households and businesses alike.
The optimism stems from a host of positive indicators — a 41% year-on-year jump in vehicle sales, record digital payments, and the strongest festive spending in years. Unified Payments Interface (UPI) transactions touched a record 2.7 billion, while Diwali sales surged 25% to over Rs 6 trillion, underscoring how domestic consumption continues to fuel growth even as global trade remains sluggish.
“With PMI readings staying firm and the government maintaining its spending momentum through both capital and revenue expenditure, the slowdown caused by heavy monsoons in Q2 appears to have given way to a much brighter Q3,” the report noted.
SBI Capital expects nominal GDP growth of around 8.5% year-on-year for the July–September quarter of FY26, with real GDP supported by a low deflator and a steady consumption recovery.
India’s economy had already shown robust momentum in Q1 FY26, growing 7.8% in real terms and 8.8% nominally, aided by strong domestic demand and a consumption boost following GST rate cuts.
GST Reforms, Demand Revival To Push FY26 GDP Growth To 7.4%, Says NIPFP
The Indian economy is likely to expand by 7.4 per cent in FY26, driven by the positive impact of goods and services tax (GST) rate rationalisation, a revival in domestic demand, and strong performance in the US economy, according to the National Institute of Public Finance and Policy (NIPFP) in its latest mid-year economic review released on Tuesday.
The projection marks a significant upgrade from NIPFP’s April estimate of 6.6 per cent growth, and also surpasses the Reserve Bank of India’s (RBI) latest forecast of 6.8 per cent.
“Largely on the back of robust public sector investment, revival in domestic consumption demand in both rural and urban areas, goods and services tax (GST) rate rationalisation, and the external sector, especially the US performing to its potential, the economy is expected to clock this robust growth,” the review stated.
