Capital Economics' economist Shah on Q3 new series GDP estimate
This story was originally published at 17:53 IST on 27 February 2026
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NEW DELHI - Shilan Shah, deputy chief emerging markets economist, Capital Economics, said the following on India's GDP growth estimate for the December quarter based on the new series of 7.8%:
India's revamped national accounts data show that the economy in nominal terms is smaller than previously thought, but they still show a rapid pace of real GDP growth over recent quarters.
The important point from a monetary policy perspective is that the new data confirm that the economy is performing strongly. They don't change our view that the Reserve Bank of India's easing cycle has come to an end.
The new data – rebased from 2011-12 (Apr-Mar) to FY23, along with methodological improvements – show that real GDP growth slowed from 8.4% in Jul-Sept to 7.8% in Oct-Dec. This is still an enviable rate of growth. For the calendar year 2025, real GDP growth came in at 7.6%, the third year in a row in which real GDP expanded by 7% or more.
Prospects are strong. Admittedly, there has been a pullback in government spending. And reforms to the labour market will probably raise compliance costs for firms in the near term, weighing on investment, though the trade-off ought to be stronger investment in the medium term.
However, subdued inflation and a boost from looser monetary policy point to a strong outlook for consumption in the coming quarters. And the lowering of US tariffs on Indian imports is a positive for the external sector. Real GDP growth should come in close to 7% again in 2026.
In terms of the monetary policy implications, there is nothing in the real GDP numbers that will worry the RBI (Reserve Bank of India). The central bank kept the repo rate on hold at 5.25% in its meeting in early February and we think a prolonged pause now lies in store. End
Compiled by Shubham Rana
Filed by Tanima Banerjee
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