India’s Real GDP Growth Seen At 8% In Q1 FY27, Above RBI Estimate: SBI Research

New Delhi, Aug 13 (KNN) India's real GDP growth is estimated to have accelerated to 8 per cent in the April-June quarter of FY27, according to a State Bank of India (SBI) Research report. The estimate is higher than the Reserve Bank of India's (RBI) projection of 7 per cent for the quarter.

SBI Research said resilient consumption and demand, improving industrial activity and continued strength in the services sector point to broad-based economic momentum. The government’s capital expenditure also remained supportive during the quarter.

Broad-Based Growth Momentum

SBI Research's nowcasting model tracks 54 high-frequency indicators across agriculture, industry and services. About 86 per cent of the indicators showed acceleration in Q1 FY27, compared with 69 per cent in the corresponding quarter a year earlier.

Consumption indicators remained strong, with domestic passenger vehicle sales rising 24.1 per cent year-on-year in June and electric vehicle registrations increasing 55.3 per cent. Electricity demand grew 11.5 per cent, while consumer credit expanded 15.8 per cent during the month.

Industrial activity was also broadly positive. Industrial production growth accelerated to 7.3 per cent in June, while cement output increased 9.8 per cent and electricity generation rose 9.8 per cent. Corporate industry credit growth stood at 19.2 per cent.

The services sector provided additional support, with services exports rising 13.3 per cent in June and cargo traffic at airports increasing 22.3 per cent.

Government Capex, Credit Support Growth

Government capital expenditure continued to support economic activity. Central government capex stood at 27.8 per cent of the FY27 Budget Estimates in the first quarter, up from 24.5 per cent a year earlier, representing a 23.7 per cent year-on-year increase.

Capital expenditure by 20 states reached 10.5 per cent of their budget estimates in Q1 FY27, compared with 10.9 per cent in the same period last year.

Credit growth has also remained strong. SBI Research said scheduled commercial bank credit growth accelerated to 17.7 per cent for the fortnight ended July 15, 2026, while deposits grew 12.7 per cent. Based on current trends, it expects aggregate deposit growth of 14.5-15 per cent and credit growth of 16-17 per cent in FY27.

Improved Monsoon Supports Outlook

SBI Research noted that improved monsoon conditions could provide further support to economic activity. The rainfall deficit of nearly 40 per cent in June was followed by surplus rainfall in July and normal rainfall in August, bringing the overall deficit down to around 12 per cent.

The report added that the Indian Ocean Dipole could also partly offset the impact of El Niño. July high-frequency indicators and monsoon progress suggest that economic momentum is likely to continue into the second quarter.

Rupee Weakness a Risk

The report, however, flagged the rupee's depreciation as a concern for financial stability. The currency had breached the 96-per-dollar level before recovering and stabilising around 95-95.5.

SBI Research said the rupee's weakness needs to be contained and called for stronger signalling and an appropriate policy response from the RBI.

(KNN Bureau)