India GDP preview: India’s Economic Momentum to Ease in Q3 FY26
India’s Q3 FY26 GDP growth is expected to moderate to around 7%, down from over 8% in the previous quarter, reflecting base effects and softer services momentum. The bigger story may lie in the new GDP series revisions, which could reshape the recent growth narrative more than the headline quarterly print itself.
India’s upcoming GDP release for Q3 FY26 (October–December) is expected to show a moderation in growth, though hardly a loss of momentum. We estimate real GDP expanding by 7% yr/yr, down from the 8.1–8.2% recorded in the previous quarter. The slowdown reflects a high base effect and some normalisation in services growth rather than any abrupt weakening in underlying demand. Nominal GDP growth, however, is expected to be more subdued, at around 7.5%%. The unusually narrow gap between real and nominal growth reflects extremely low inflation during the quarter — roughly 0.8% on average.
From the production side, the picture is mixed. We anticipate a slight cooling in services growth and softer agricultural momentum. Government capital expenditure appears to have contracted sequentially in November and December, while state-level revenue spending has remained restrained. Merchandise exports also faced headwinds amid global trade uncertainty. Yet there are offsets. High-frequency indicators suggest a recovery in manufacturing, supported by GST rationalisation and improving industrial output. Auto sales strengthened during the quarter, rural demand indicators improved alongside favourable crop output, and corporate earnings growth remained healthy.
There is, however, a crucial caveat. These projections are based on the old GDP series. The upcoming release will incorporate a new base year, revised data sources and updated methodology. If earlier years are revised upward, subsequent growth calculations may shift as well. February 27 may therefore deliver not only a quarterly print but also a re-framing of the recent growth trajectory.