New Delhi, Sep 7 (IANS) India’s economic growth is likely to remain above 7 per cent in FY27 as a strengthening investment and export cycle offsets a consumption moderation and fading impact of domestic policy support, a report has said.
The report from SBI Funds Management (SBIFM) Research forecasted nominal GDP growth to accelerate to above 12 per cent in the coming quarters, even as sticky inflation and elevated global commodity prices could keep interest rates higher for longer.
“In the absence of a fresh global shock, FY27 growth estimates will likely need to move above 7 per cent,” the report said.
The firm expects that Reserve Bank of India could eventually shift from its current neutral stance towards gradual tightening, with around 50 basis points of cumulative rate hikes in FY27.
It predicted a stronger growth trajectory to provide room for real rates to inch up if inflation remains sticky. The optimistic outlook comes on close heels of real GDP growth of 7.8 per cent year-on-year in Q1 FY27, with investment and exports emerging as the principal drivers rather than consumption.
The report mentioned composition of growth as particularly encouraging, with real gross fixed capital formation and exports increasing nearly 12 per cent each, compared with 7.1 per cent growth in consumption.
“As the domestic policy impulse fades and consumption becomes less broad-based, the investment cycle and global trade cycle will have to carry a greater share of the growth burden,” the report said.
Corporate capital expenditure by BSE 500 companies is expected to grow 11 per cent in FY27, following Rs 10.4 trillion of capex in FY26. Power sector could account for around 55 per cent of incremental corporate capex, followed by iron and steel and capital goods.
—IANS
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