The  Indian economy may have grown faster than expected in the first quarter of the current financial year (April–June 2025). According to a report by the State Bank of India (SBI), GDP growth during this period is estimated at 6.8% to 7%, higher than the Reserve Bank of India’s (RBI) forecast of 6.5%.

SBI’s analysis says that GDP grew at 6.9%, while Gross Value Added (GVA) stood at 6.5%.This estimate is in line with the growth trend seen in the past few quarters.

However, SBI is more cautious about the full financial year (FY26). It expects India’s overall growth to be 6.3%, slightly lower than the RBI’s full-year target of 6.5%. The bank said it reduced RBI’s growth projection by 0.2 percentage points for the rest of the year (Q2–Q4).

The report also pointed out an interesting trend: the gap between real GDP (which factors out inflation) and nominal GDP (which includes inflation) has been shrinking. In Q1 FY23, the gap was as high as 12 percentage points. By Q4 FY25, it had narrowed to just 3.4 points.

For Q1 FY26, this gap is expected to shrink even further because inflation is at historically low levels.This means that while real GDP growth looks strong at 6.8%–7%, nominal GDP growth could fall to around 8%, giving the impression of a slowdown. SBI warned that this narrowing gap might hide the fact that growth momentum in the economy is slowing down.