India’s Growth To Moderate In H2 FY27, May Rebound To 7.2% In FY28: ICICI Bank Report

New Delhi, Aug 6 (KNN) India’s economic growth is expected to slow in the second half of FY27 due to a high base effect, but may strengthen to around 7.2 per cent in FY28, according to a report by ICICI Bank. 

The lender estimates overall growth at 6.9 per cent for FY27.

The report noted that while global macroeconomic volatility remains a concern, its impact on India has been limited so far, with most high-frequency indicators pointing to robust growth in the first quarter and continued momentum into the second, ANI reported.

Mixed Signals in Domestic Indicators

The report highlighted that, apart from softer Purchasing Managers’ Index (PMI) readings, most key indicators suggest the economy is on an improving trajectory. However, the Reserve Bank of India (RBI) is expected to closely monitor growth outcomes in the coming months, particularly as expansion may moderate in the latter half of the fiscal year.

The central bank’s projection of 7.3 per cent growth for the first quarter of FY27 signals strengthening underlying demand, which could support momentum heading into FY28.

Balanced Risks for Growth and Inflation

According to the report, the RBI now views risks to growth and inflation as evenly balanced. This marks a shift from its earlier assessment, where growth risks were seen as skewed to the downside and inflation risks to the upside.

Uncertainty around global conditions and weather-related factors such as El Niño continue to influence the medium-term outlook.

Rate Hike Cycle May Be Delayed

The lender indicated that a cumulative 50 basis points increase in policy rates remains possible, depending on inflation trends and external factors such as oil prices.

If crude prices remain high, a rate hike cycle could begin as early as December 2026. However, in a lower oil price scenario, tightening may be delayed until around April 2027, with the base case pointing to a later start.

Liquidity to Remain Supportive

The report added that growth prospects remain favourable as the RBI is unlikely to undertake aggressive liquidity tightening following recent inflows linked to FCNR deposits. Supportive liquidity conditions are expected to underpin economic activity even as the policy outlook evolves.

(KNN Bureau)