A recent analysis from the State Bank of India's research wing has projected a potentially stronger economic trajectory for India in the coming fiscal year. The report suggests that the country's Gross Domestic Product (GDP) growth for the financial year 2025-26 (FY26) could exceed the current estimates by the National Statistical Office (NSO) once a crucial statistical update is implemented.
The Impact of the Base Year Revision
The core of this optimistic reassessment lies in the proposed revision of the base year for calculating national accounts. The SBI report, authored by Group Chief Economic Adviser Dr. Soumya Kanti Ghosh, emphasizes that the current GDP series uses 2011-12 as its base year. Updating this base year to a more recent period, such as 2022-23, is a standard statistical practice to reflect changes in the economic structure and consumption patterns more accurately.
This revision is not merely a technicality. The shift to a new base year will incorporate updated data from various surveys, including the Consumer Expenditure Survey (CES) and the Annual Survey of Industries (ASI). These datasets capture the profound transformations in the Indian economy over the past decade, including the rise of the digital economy, changes in consumption baskets, and the formalization of sectors. Consequently, the revised GDP figures are expected to present a more realistic picture of the economy's size and growth momentum.
Projections Pointing Beyond 8% Growth
The SBI Research report provides a quantitative forecast based on this impending methodological change. It estimates that India's real GDP growth for FY26 could be around 20-25 basis points higher than the NSO's initial projection. To put this into perspective, the NSO's First Advance Estimate, released in early January, pegged FY25 GDP growth at 7.6%. The government's Economic Survey has previously indicated a baseline projection of 6.5% to 7% for FY26.
The SBI analysis posits that after the base year revision, India's GDP growth for FY26 has a strong chance of crossing the significant 8% threshold. This would mark a continuation of India's status as the world's fastest-growing major economy. The report also highlights that the country's nominal GDP, which includes the effect of inflation, is on track to reach an impressive $5 trillion in the next few years, bolstered by these revised growth estimates.
Broader Economic Implications and Context
This upward revision in growth prospects carries substantial implications. A higher recorded GDP growth enhances India's macroeconomic credibility on the global stage, potentially attracting more foreign investment. It also provides the government with greater fiscal space and a stronger foundation for long-term policy planning.
The report contextualizes this growth within recent performance, noting that India's economy has demonstrated remarkable resilience. The average growth rate from FY22 to FY24 is estimated at a robust 8% or above, showcasing a swift and sustained recovery from the pandemic-induced slowdown. The analysis further suggests that the Indian economy is undergoing a structural shift, moving towards a trend growth rate of around 7.5%, which is significantly higher than the pre-pandemic average.
In conclusion, the SBI Research report offers a compelling data-driven argument for an upward reassessment of India's near-term economic growth. While the official revision by the NSO is awaited, the analysis underscores the underlying strength and structural transformation of the economy. If the base year revision proceeds as anticipated, the official narrative of India's economic growth in FY26 could be rewritten to reflect a pace exceeding 8%, reinforcing its position as a global growth engine.
