GDP growth for second quarter at 7.5% and more due to GST cut led festive sales, says SBI report

India’s real Gross Domestic Product (GDP) growth for second quarter (July to September) would be 7.5% or more due to the consumption boost following Goods & Services Tax (GST) rate cut said the research department of State Bank of India (SBI) on Tuesday (November 18, 2025).

The Reserve Bank of India (RBI) had projected Q2 GDP growth rate at 7%.

“Growth is being supported by a pick up in investment activities, recovery in rural consumption, and buoyancy in services and manufacturing, underpinned by structural reforms like GST rationalization that also helped unleash a festive spirit that decisively showcased triumph of hope over hype,” said SBI Research in a report. 

“In continuum of the good numbers from festive led sales, percentage of leading indicators in consumption and demand across agriculture, industry, service sectors showing acceleration has increased to 83% in Q2 from 70% in Q1. Based on the estimated model, we obtain a nowcast of real GDP growth of 7.5% in Q2FY26 with possibility of an upside surprise,” it said.

“However, risks persist from volatile global commodity markets and potential spillovers from trade disruptions. Overall, India’s near-term outlook is strong, with macroeconomic stability providing space for sustained medium-term growth,” it pointed out.

As per analysis by SBI Research the gross domestic GST collections might come around ₹1.49 lakh crore for November 2025 (returns of October 2025 but filed in November 2025), a YoY growth of 6.8%. 

Coupled with ₹51,000 crore of IGST and cess on Import, the November GST collections thus could cross ₹2 lakh crore, driven by the peak festive season demand led by lower GST rate and increased compliance while most of states experience positive gains, it said.

Stating that during the last month festive season (September-October2025), consumption has got a big boost with GST rationalization, first indication coming from analysis of Credit and Debit card spending patterns across the latitude, it said in credit cards, merchant categories like Auto, Grocery stores, Electronics, Furnishing and Travel indicated a huge growth.

In e-commerce channel 38% spends were seen on Utility & Services, followed by 17% on Supermarkets and Grocery and Travel Agents held 9% share, it added. 

Also, city wise credit card spends revealed that demand had increased across regions but growing in mid-tier cities the most as E-com sales had largely been positive across cities. 

“With GST rationalization, Debit card spends too shows growth across all major states in Sep/Oct25 over Sep/Oct24.

However, for Debit cards, within E- Commerce spending, Metro has shown highest growth (8%) followed by Urban areas (7%) in September/October 2025 compared to September/October 2024,” it said. 

“Decoding consumption elasticities for major sectors based on the change in weighted effective GST rate post GST rationalization reveals all sectors except textile are highly elastic delineating strong response of consumption due to GST rationalization,” it said. 

“The reduction of effective GST rate should spurt savings for the consumers. Juxtaposing GST rates with Monthly Per Capita Consumption Expenditure (MPCE) [Household Consumption Expenditure Survey (HCES: 2023-24] reveals that on an average, a consumer may save 7% per month on their consumptions based on initial estimates and could rise further with availability of more data,” it added. 

On data concerning vehicle sales it said all regions exhibited double-digit growth in car sales volume (19%), while maximum growth came from Rural regions, followed by Urban region with 39% of cars sold in the price range of above ₹10 lakh.

Urban and Metro centers also exhibited growing premiumization as higher end variants/models/brands (₹20 lakh) found accelerated growth across value-volume matrix, it said.