India’s nominal GDP growth is expected to improve to around 11 per cent in FY27, with real GDP growth projected at 7.2 per cent, supported by domestic credit-led consumption and continued policy support, according to a report released on Friday.
The report by SBI Mutual Fund said it remains “constructive on growth” over the medium term, with structural reforms and premiumisation shaping the outlook. However, it cautioned that a global economic slowdown and geopolitical tensions remain key risks. In FY26, real GDP growth averaged about 8 per cent year-on-year in the first half, while nominal growth remained relatively subdued at 8.8 per cent.
The fund house expects inflation to mean-revert to around 4 per cent in FY27, with the Reserve Bank of India (RBI) likely to maintain a prolonged policy pause unless global growth conditions worsen materially.
It also highlighted recent liquidity measures, including a ₹2 trillion round of Open Market Operations (OMO) and a $10 billion buy-sell swap conducted in mid-January.
“Rural spending outlook is modestly positive, as welfare measures and low inflation help offset the impact of weaker kharif incomes. A positive development on an India–US trade deal could be mildly supportive for growth, although India continues to face stiff competition from the rising dominance of Chinese exports,” the report noted.
The fiscal deficit is projected to narrow to 4.2 per cent of GDP in FY27 from an estimated 4.4 per cent in FY26, although state-level deficits remain elevated. Government bond supply is expected to rise to about ₹29 trillion, keeping demand–supply dynamics tight.
(IANS)
