Domestic consumption, credit to drive India’s 7.2% GDP growth in FY27: SBI Mutual Fund

In the fiscal year 2027, India's economic growth will be mainly driven by domestic consumption and credit, and the real GDP will increase by about 7.2 per cent, while nominal GDP is expected to improve by 11 per cent, as per the report SBI Mutual Fund.

SBI Mutual Fund's report stated that a growth of bank credit of 13-14 per cent is anticipated for FY27. The bank credit climbed from 9 per cent in May to 11.4 per cent by November 2025, whereas aggregate credit is expected to rise by 10.5-11 per cent in FY26.

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The fund company has reported that the household credit is expected to be higher than that of the corporate, and the sectors dependent on credit-based demand and premiumization trends should perform better in the near term.

The real GDP growth for FY26 was about 7.5 per cent, according to the report, highlighting that the exports are still the weakest link despite inflation being under control.

The fund company forecasted that the trends from equity markets in 2025 would 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 reported by IANS.

As the Indian markets adjusted their valuation premiums concerning EMs, a fair share of capital flows was anticipated for them, according to the report.

The policy support is projected to be the growth factor that will push the equity market to a slight increase, although the limitation in the supply of equities will still be prominent, the report stated.

The company chose to invest in areas like power, gas transmission, capital goods, cement, and renewables.

The Consumer Price Index (CPI) inflation was projected to be around 4 per cent in the fiscal year 2027, with the Reserve Bank of India (RBI) expected to keep the interest rates unchanged for a long time. The government will issue bonds worth Rs 29 trillion, and the depreciation of the Rupee will be around 2 per cent, with the currency being at Rs 92 per US dollar by the end of FY27.

The fund house reported global growth to have been the same despite tariffs prevailing so far in this fiscal, thus being supported by loose fiscal policy and US capex led by AI.

He indicated that Europe had become fiscally expansive while China was still relying on exports as central banks were about to conclude their easing cycle.

Frequently-Asked Questions (FAQs): India’s Economic Growth Outlook for FY27

1) What is the GDP growth forecast for India in FY27?

India’s real GDP is projected to grow by 7.2 per cent in FY27, while nominal GDP is expected to rise by about 11 per cent, according to a report by SBI Mutual Fund.

2) What will drive India’s economic growth in FY27?

The growth is expected to be domestically driven, led by strong consumption demand and credit growth, with household borrowing likely to outpace corporate credit.

3) How is bank credit expected to perform in FY27?

Bank credit growth is projected at 13–14 per cent in FY27. Aggregate credit is estimated to grow 10.5–11 per cent in FY26, following a steady rise through 2025.

4) What is the outlook for equity markets and key sectors?

The trends in the equity market that are anticipated for the year 2025 will carry over into 2026. The fund manager favours investments in sectors like power, gas transmission, capital goods, cement, and renewable energy, which will benefit from government support and steady demand.

5) What are the key macroeconomic forecasts for FY27?

The expected CPI inflation is around 4 per cent as the RBI might go for a long suspension of its rate-hike cycle. In the next fiscal year, the government is expected to supply Rs 29 trillion worth of bonds, while the rupee's depreciation may be limited to around 2 per cent, which means it might reach almost Rs 92 for a US dollar.