India's GDP growth may cross 7.5% in Q2, says SBI research report

India’s GDP growth is expected to reach 7.5% or more in the second quarter of the current fiscal, mainly driven by robust festive sales triggered by the GST rate cut in late September, a SBI research report said on Tuesday.

Growth is being supported by a pick up in investment activities, recovery in rural consumption, and buoyancy in services and manufacturing, underpinned by structural reforms like GST rationalisation, which also helped unleash a festive spirit that decisively showcased the triumph of hope over hype, it said.

"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,” said the report by SBI’s economic research department.

The government will release the GDP data for the July-September quarter later this month.

The Reserve Bank has projected the economic growth for the second quarter at 7%.

The report further said analysis indicates that gross domestic Goods and Services Tax (GST) collections may come around ₹

1.49 lakh crore for November (returns of October but filed in November), recording an annual growth of 6.8%.

Coupled with ₹51,000 crore of IGST and cess on import, the November GST collections thus could cross ₹2 lakh crore, driven by the peak festive season demand led by lower GST rate and increased compliance, while most states experience positive gains, it added.

It also noted that during the last month festive season (September-October), consumption has got a big boost with GST rationalisation, the first indication coming from analysis of credit and debit card spending patterns across the latitude.

In credit cards, merchant categories like auto, grocery stores, electronics, furnishing and travel indicated a huge growth in the e-commerce channel, where about 38% of spending was on utility and services, followed by 17% on supermarkets and grocery, and travel agents held about 9% share.

City-wise credit card spends reveal that demand has increased across regions, but is growing in mid-tier cities the most, as e-com sales have largely been positive across cities, the report said.

"With GST rationalisation, debit card spends too show growth across all major states in September/October 2025 over September/October 2024,” it added.

The report also said India’s macroeconomic outlook remains one of cautious optimism, underpinned by robust domestic demand and easing inflationary pressures.

The growth is being supported by strong investment activities, recovery in rural consumption, and buoyancy in services and manufacturing, it said, adding that the GST 2.0 reforms are expected to boost private consumption and domestic demand.