SBI Research GDP Growth estimates point to a strong start to FY27. SBI Research expects India’s real GDP to grow by 8 per cent in the first quarter of FY27. The estimate is higher than the Reserve Bank of India’s 7 per cent projection. Moreover, strong indicators across consumption, industry and services support the growth outlook.
SBI Research GDP Growth outlook strengthens for Q1 FY27
SBI Research said 86 per cent of the 50 leading indicators it tracks showed acceleration during Q1 FY27. This compares with 69 per cent during the same quarter a year earlier. In addition, its nowcasting model supports the 8 per cent growth estimate.
The model uses 54 high-frequency indicators. These cover agriculture, industry and services. Therefore, the data points to stronger economic momentum during the quarter.
Consumption and demand remain resilient
Consumption and demand remained resilient during the April-June quarter. Domestic passenger vehicle sales rose 24.1 per cent year-on-year in June. At the same time, electric vehicle registrations increased 55.3 per cent.
Electricity demand also grew 11.5 per cent during the month. Meanwhile, consumer credit increased 15.8 per cent. These trends indicate continued strength in consumer activity.
SBI Research GDP Growth gets industrial sector support
Industrial activity remained broadly satisfactory, although some areas saw weaker performance. General Index of Industrial Production (IIP) growth accelerated to 7.3 per cent in June.
Corporate industry credit growth also rose to 19.2 per cent. Meanwhile, cement output increased 9.8 per cent. Electricity generation also grew 9.8 per cent during the month.
Services sector adds to economic growth
The services sector also supported overall economic growth. Services exports grew 13.3 per cent in June. Cargo traffic at all airports increased 22.3 per cent.
Bank credit growth also accelerated to 18.6 per cent. As a result, services activity and credit growth continued to provide support to the wider economy.
Government capex remains supportive
Government capital spending remained supportive of economic activity. Central government capital expenditure reached 27.8 per cent of the budget estimate in Q1 FY27. This was higher than 24.5 per cent recorded a year earlier.
Capital spending grew 23.7 per cent during the period. Meanwhile, spending by 20 states stood at 10.5 per cent of their budget estimates. It also grew 5.5 per cent year-on-year.
Monsoon conditions improve growth outlook
SBI Research said better monsoon conditions could further support the growth outlook. India faced a nearly 40 per cent rainfall deficit in June. However, surplus rainfall in July and normal rainfall in August helped reduce the overall deficit to around 12 per cent.
Improving rainfall conditions could support rural demand and agricultural activity. Therefore, the monsoon remains an important factor for the growth outlook.
SBI Research GDP Growth expected to remain robust
Looking ahead, SBI Research said July’s high-frequency data and improving monsoon conditions indicate that economic momentum is likely to continue.
The report expects growth to remain robust in the coming months. It also estimates FY27 aggregate deposit growth at 14.5-15 per cent. Credit growth could reach 16-17 per cent based on current trends.
