Multiple financial institutions are aligning on India's economic outlook for FY27, with SBI Research projecting 6.6% growth and BMI forecasting 6.7% growth. According to SBI Research, this represents a gradual normalisation from the current strong performance, with quarterly estimates of 6.8% in Q1, 6.6% in Q2, and 6.5% in both second half quarters. SBI's projection is lower than the Reserve Bank of India's estimate of 6.9%, indicating a more conservative outlook. BMI's revision is attributed to waning economic momentum and oil price shock from the Iran war, while SBI notes that these projections may be revised as fresh data flows in and geopolitical developments evolve.
India's economic resilience is evident in the latest quarterly data, with SBI Research reporting 7.2% GDP growth in Q4 FY26, closely aligning with the National Statistical Office's advance estimate of 7.3%. The report monitors 50 high-frequency indicators across key sectors, with 85% showing acceleration in Q4 FY26, compared to 83% in the previous quarter. Strong credit expansion supports this growth, with lending by scheduled commercial banks rising 16.1% in FY26, up from 11% in FY25, and incremental credit of ₹29.5 lakh crore. SBI Research forecasts credit growth of 13-14% in FY27, supported by government-driven consumption and healthy GST collections. Credit growth remained near 16% as of April 30 and is expected to stay strong in the first half of FY27 before moderating.
Both SBI and BMI highlight significant vulnerabilities from rising crude oil prices, with SBI estimating that every $10 per barrel increase could widen the current account deficit by 30-35 basis points and reduce GDP growth by 20-25 basis points. At $105 per barrel in May, the average oil price is expected to be around $100 per barrel, with SBI Research noting that India's GDP is expected to be ~ 6.6% in FY27. SBI's scenario analysis shows that a sustained rise to $110 per barrel could reduce growth to 6.4%, while $130 oil could drag it down to 6.0%. The current crude price surge from about $73 per barrel before the war to $105 per barrel after the US rejected Iran's peace proposal poses significant macroeconomic risks.
Currency depreciation emerges as a critical risk factor, with SBI Research warning that a depreciation of Re 1 in the rupee could lower nominal GDP in dollar terms by 20-25 basis points. The report cautions that if the exchange rate touches ₹95 per dollar, India's economy could shrink to $4.04 trillion in FY27, potentially delaying the achievement of the $5 trillion target to FY30. SBI Research calls for structural steps to strengthen the balance of payments position, noting that higher crude prices and rising transport and insurance costs are adding pressure on external accounts. The report examines financing options including a 'Resurgent Indian Diaspora Bond' to support external funding needs.
Looking ahead, SBI Research emphasizes artificial intelligence as a major global growth driver, estimating that AI-linked growth potential in India could range between 4% and 10%, supported by expansion in IT services, SaaS platforms and efficiency improvements across sectors. The report urges India to focus on AI-led productivity and competitiveness gains, stating that 'the AI revolution is not just another bandwagon.. India can hardly afford to miss 'leading from the front' through carefully crafted policies. Despite global challenges, India's economic activity has remained resilient, with rural demand supported by healthy farm and non-farm activity, while urban consumption shows steady recovery backed by fiscal support measures.
