In a few hours from now the third-quarter GDP numbers will be announced, and all eyes are on that one key number. Will GDP continue above that blistering 8% mark, or will it signal a slower growth pace? The Financial Express poll of economists expects the growth rate to be around 7.35% for the October-December quarter. This aligns with the growth projections for the entire FY26 by the RBI in the February MPC and the First Advance Estimates released in January.
However, many economists are optimistic about the Q3 reading, as they expect the GST rate cut booster shot to propel growth despite the adverse base effect. The strong auto sales for the third consecutive month coupled with steady consumption trends across the country are fuelling the bullish forecasts.
Q3 GDP projections close to the 8% mark
Here is a quick recap of the projections by some of the leading economists and brokerages across India.
IDFC First Bank Q3 GDP: Growth recovery becoming broad-based
Both rural and urban demand is expected to maintain the growth momentum in Q3 as well. According to them, “strong crop output and a pick-up in wage growth have supported rural recovery.”
Meanwhile, IDFC First Bank believes that “urban demand has gained pace, supported by the GST cut, which was timed with the start of the festival season.”
They pointed out that the recovery in consumption is expected to be sustained, with a visible pick-up in urban and rural real wage growth. On the old base, they see “real GDP growth in Q3FY26 tracking at 8.7% Vs 8.2% in Q2. Full-year real GDP growth is estimated at 8.1% in FY26.”
ICRA Q3 GDP preview: Unfavourable base effect may lead to slowdown
Rating agency ICRA’s Q3 GDP projections are significantly lower in comparison. They expect the year-on-year GDP expansion to ease to 7.2% in Q3 from 8.2% in Q2. Lower expansion in the services and agriculture sectors may outweigh the six-quarter high growth in the industrial sector.
Aditi Nayar, Chief Economist, Head of Research & Outreach, ICRA, said, “The reasons for the estimated sequential slowdown include an unfavourable base effect, contraction in government capital spending, subdued state government revenue expenditure, and weak merchandise exports. Nevertheless, healthy demand during the festive season, boosted by GST rationalisation, likely kept the pace of growth above 7% in the said quarter.”
ICICI Bank Q3 GDP preview: Growth remains firm
The GDP preview by ICICI Bank indicates that the growth trajectory in Q3 remains firm, despite the global uncertainties. They expect India’s real GDP to grow at 7.7% YoY and the GVA is seen growing 7.9% YoY.
“Buoyant investment spending by states is also likely to support growth. Rural consumption remains strong with GST rationalisation supporting urban demand” are seen as the key factors supporting the growth chart.
Additionally, they pointed out that strong growth in auto sales and a robust pickup in credit off-take alongside marginal increases in wages and consumer durables bode well for consumption.
Union Bank Q3 GDP preview: The big GST booster
According to projections by Union Bank, the Q3FY26 GDP growth is seen elevated, well past the 8% mark. The big boost, according to them, is the GST rate cut that helped propel growth, despite adverse base effects.
According to Union Bank, the overall demand conditions remained upbeat. “Rural demand strengthened further, with high-frequency indicators showing resilient rural consumption, supported by positive farm and non-farm activity. Urban demand also picked up through the festive season and post-GST adjustments,” they added.
They have listed out these consumption drivers as critical for services, especially trade and manufacturing GDP sub-segments. “Investment momentum also saw a pickup, primarily led by central government spending, even as sector-specific pickup is visible in private capex,” they explained.
Additionally, a spike in gold demand is also seen as a probable catalyst boosting a valuable sub-segment in gross capital formation.
However, they clarified this projection is based on the old base year.
Can the new base be a gamechanger?
One of the most talked about aspect ahead of the GDP is the new base year that debuts with the Q3 data. The GDP series will be revised with base-year FY23. The new series will capture the the latest consumption patterns, incorporate new sources of information and address the deflator issues. According to the economists, in the new base year series, discrepancies will be reduced in early estimates and will be eliminated in the final estimate once a full set of data is available.
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