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India's Economy to Grow 7.2% in FY27, Fueled by Domestic Consumption Boom

A report from SBI Mutual Fund projects India's real GDP will grow by about 7.2% in FY27, driven primarily by domestic consumption and credit. Bank credit growth is forecast to reach 13-14%, with household credit expected to outpace corporate borrowing. The report notes that inflation is expected to remain benign near 4%, allowing the RBI to maintain an extended pause on rates. It also forecasts a continuation of current equity market trends into 2026, with specific sectors like power and capital goods preferred.

Key Points: India's FY27 GDP Growth Forecast at 7.2%: SBI MF Report

  • 7.2% real GDP growth forecast for FY27
  • Bank credit growth projected at 13-14%
  • Household credit to outpace corporate credit
  • CPI inflation forecast near 4%
  • Equity trends of 2025 to continue
2 min read

India's domestic consumption to drive 7.2 pc real GDP growth in FY27: Report

SBI Mutual Fund report forecasts 7.2% real GDP growth for India in FY27, driven by strong domestic consumption and credit growth.

"segments reliant on credit-driven demand and premiumisation trends should outperform - SBI Mutual Fund Report"

New Delhi, Jan 6

The growth of India's economy will be domestically driven by consumption and credit in FY27, with real GDP to rise about 7.2 per cent and nominal GDP improving by 11 per cent, a report said on Tuesday.

The report from SBI Mutual Fund stated that bank credit growth is projected at 13-14 per cent in FY27. Bank credit rose from 9 per cent in May to 11.4 per cent by November 2025, with aggregate credit likely to grow by 10.5-11 per cent in FY26.

Household credit is expected to outpace corporate, the fund house said, adding that segments reliant on credit-driven demand and premiumisation trends should outperform in the near term.

FY26 real GDP growth was around 7.5 per cent, the report said, noting that exports remain the weakest link even as inflation stays benign.

In equity markets, the fund house forecasted the trends of 2025 to continue into 2026.

"EM equities and hard assets, including industrial commodities, should stay supported after years of underperformance on the back of improving global growth," the report said.

As Indian markets moderated on valuation premiums relative to EMs, they should receive their fair share of flows, the report forecasted.

Policy support should help growth, which should help equities inch higher, even as equity supply caps gain, it said.

The firm preferred sectors such as power, gas transmission, capital goods, cement, and renewables.

CPI inflation was forecasted near 4 per cent in FY27, with the RBI likely to remain on an extended pause. Government bond supply will rise to Rs 29 trillion, and Rupee depreciation should slow to about 2 per cent, near Rs 92 per US dollar in FY27.

The mutual fund said that global growth held up despite tariffs so far in this fiscal, aided by loose fiscal policy and AI-led US capex.

Europe has turned fiscally expansionary, and China remains export-dependent as central banks near the end of the easing cycle, it noted.

- IANS

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Reader Comments

P
Priya S
Good to see the focus on sectors like power and renewables. That's where the future lies. But I'm a bit concerned about household credit outpacing corporate. We need to be careful that easy credit doesn't lead to a debt trap for families. Responsible lending is key.
R
Rohit P
The report says exports are the weakest link. This is a valid point. For sustainable long-term growth, we need to make 'Make in India' for the world a bigger success. Need to boost manufacturing competitiveness globally.
S
Sarah B
As an investor, the sector preferences are interesting. Capital goods and cement are cyclical but essential for infrastructure. The forecast for rupee stability near 92/$ is also reassuring for my portfolio planning.
V
Vikram M
All this sounds positive on paper. But will the growth be inclusive? The benefits must reach the small towns and villages, not just the metros. The "premiumisation" trend mentioned often leaves the common man behind.
K
Karthik V
CPI at 4% and RBI on pause is the best combo for the aam aadmi. It means loan EMIs might not shoot up and prices stay in check. Fingers crossed this projection holds true! 🤞

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