NewKerala.com

India's GDP to Hit 11% Growth by FY27, Fueled by Credit and Policy Push

India's nominal GDP growth is forecast to improve to about 11% in FY27, with real growth at 7.2%, supported by domestic credit-led consumption and policy initiatives. The SBI Mutual Fund report highlights structural reforms and premiumisation as key growth drivers, though global slowdown and geopolitics pose risks. Inflation is expected to mean-revert to 4% in FY27, with the RBI likely maintaining a policy pause barring global deterioration. Fiscal deficit is projected to ease to 4.2%, but government bond supply may rise to Rs. 29 trillion, keeping demand-supply dynamics tight.

Key Points: India's Nominal GDP Growth to Reach 11% in FY27: SBI MF Report

  • Nominal GDP growth at 11% in FY27
  • Real growth at 7.2% with inflation mean-reverting to 4%
  • Domestic credit-led consumption and policy support as drivers
  • Fiscal deficit easing to 4.2% with tight bond supply dynamics
2 min read

India's nominal GDP growth to improve to 11 pc in FY27: Report

SBI Mutual Fund projects India's nominal GDP growth at 11% in FY27, driven by domestic credit, policy support, and structural reforms, with inflation easing to 4%.

India's nominal GDP growth to improve to 11 pc in FY27: Report
"constructive on growth in the medium term with structural reforms and premiumisation driving the outlook – SBI Mutual Fund Report"

New Delhi, Jan 2

India's nominal GDP growth is expected to improve to about 11 per cent in FY27 with real growth at 7.2 per cent, driven by domestic credit‑led consumption and policy support, a report said on Friday.

The report from SBI Mutual Fund said that it is "constructive on growth" in the medium term with structural reforms and premiumisation driving the outlook, though global slowdown and geopolitics remain key risks. Real GDP growth in FY26 averaged 8 per cent year‑on‑year in the first half while nominal growth was subdued at 8.8 per cent.

The fund house expected inflation to mean‑revert to about 4 per cent in FY27, with the Reserve Bank of India (RBI) likely to keep policy on a long pause unless global growth deteriorates.

The mutual fund highlighted recent liquidity measures including a Rs 2 trillion Open Market Operations (OMO) round and a $10 billion buy‑sell swap in mid-January.

"Rural spending outlook is modestly positive as welfare measures and low inflation mitigate the kharif income setback. A positive development of India-US trade deal could only be mildly positive for growth outlook as the country still faces stiff competition from rising dominance in Chinese exports," the report noted.

Fiscal deficit is projected to ease to 4.2 per cent in FY27 from a likely 4.4 per cent in FY26, though state deficits remain elevated. Government bond supply could rise to Rs. 29 trillion, keeping demand-supply dynamics tight.

The rupee's near 5 per cent depreciation in 2025 was attributed to hedging demand that has pushed up forward premiums in India and driven the Indian fixed income yields higher too, the report noted.

Typically, India's lower inflation relative to the US, stable crude prices, fiscal discipline, and current account deficit (CAD) under 1 per cent of GDP support Indian assets and the rupee.

Bottom-up focus on consumption, financials, and select industrials would be the key, the fund house suggested.

- IANS

Share this article:

Reader Comments

P
Priya S
Good to see projections improving, but I'm cautiously optimistic. The report itself mentions global slowdown and geopolitics as risks. We've seen forecasts change before. The real test is whether this growth translates to more jobs for our youth.
R
Rohit P
Nominal growth at 11% sounds great, but what about inflation? If it's at 4% as they predict, the real growth of 7.2% is still solid. The key is controlling prices for essentials - that's what matters to my family's budget.
S
Sarah B
The point about stiff competition from Chinese exports is very real. A US trade deal would be helpful, but we need to build stronger domestic manufacturing capabilities. 'Make in India' needs to move beyond phones and into more complex sectors.
V
Vikram M
Fiscal deficit easing to 4.2% is a positive signal for long-term stability. However, the report notes state deficits remain high. That's a concern - growth needs to be sustainable across all levels of government, not just the centre.
M
Michael C
As an investor, the focus on consumption, financials, and select industrials makes sense. The RBI's likely long pause is also good for planning. Hope the rural economy revival they mention is strong and broad-based.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50