India’s growth momentum remains strong, Q1FY27 GDP growth likely at 8%: SBI Research

Expressing optimism over India’s growth prospects, SBI Research in its latest report has said that the country’s Gross Domestic Product (GDP) growth is likely to rise to 8% in the first quarter of the current fiscal year (Q1FY27), higher than the Reserve Bank of India’s (RBI) 7% growth projection.

It noted that the underlying momentum remains broad-based. It said that, of the more than 50 leading indicators across consumption and demand, agriculture, industry, services and other sectors that it tracks, around 86% are showing acceleration in Q1FY27, compared with 69% in Q1FY26.

It said consumption and demand remain resilient. High-frequency demand indicators continue to support the growth outlook, while industrial activity remains broadly satisfactory, barring a few pockets. Services are providing further support, while other indicators also corroborate its 8% growth estimate.

It further said that monsoon conditions have improved, with a nearly 40% rainfall deficit in June partly offset by surplus rainfall in July and normal rains in August, bringing the overall deficit down to around 12%.

Positive Indian Ocean Dipole (IOD) conditions could also partly offset the impact of El Nino. It noted that July’s high-frequency indicators and the progress of the monsoon suggest continued growth momentum. Therefore, it believes that growth is likely to remain robust going forward.

However, it cautioned that after the rupee breached Rs 96 per dollar, the currency recovered but has since been moving around Rs 95-95.5 per dollar, warranting a calibrated policy response from the RBI. As per the report, it is important to keep rupee depreciation at bay due to financial stability concerns, as the recent depreciation calls for stronger signalling.