SBI Research Sees India GDP Growth At 7% In Q1 FY27 Despite Global Headwinds

India's economy is expected to maintain strong growth momentum in the April-June quarter of FY27, according to a report by SBI Research. The report estimates gross domestic product (GDP) growth of around 7%, exceeding earlier expectations despite uncertainties linked to the West Asia conflict.

It noted that while some major global economies faced slower growth during the quarter, India continued to show resilience. The assessment also highlighted developments in inflation, foreign exchange management, monsoon progress and credit growth trends.

India GDP Growth Forecast for Q1 FY27 At 7%

SBI Research estimated that India's economy expanded by around 7% in the April-June quarter of FY27. The report stated that global economic recovery remains uneven, with the United States economy slowing unexpectedly during the same period.

Despite external uncertainties, domestic economic indicators pointed towards strengthening growth momentum. The projected growth rate is higher than earlier expectations and reflects resilience across key sectors of the economy.

RBI Monetary Policy and Inflation Outlook in FY27

The report expects the Reserve Bank of India's Monetary Policy Committee to maintain policy rates at current levels in the near term. According to SBI Research, consumer price index inflation is likely to remain above 5% during the next 2 quarters, with average inflation for FY27 projected at around 5%.

Inflation in the first quarter of FY27 stood at 3.9%, but rising risks linked to oil prices, currency pressures and external capital flows have altered the outlook. The report noted that the current environment has made a more accommodative policy stance increasingly costly.

RBI Forex Management and Rupee Performance

SBI Research highlighted the Reserve Bank of India's active management of foreign exchange markets through adjustments in its forward positions. Outstanding short-term forward positions declined by about $13 billion by the end of June, including a reduction of nearly $10 billion in contracts with maturities of up to 1 month.

At the same time, long-term positions increased from $56 billion to $64 billion, signalling a shift in the composition of forex management tools. The report also noted that the rupee has depreciated 11.26% since April 1, 2025, although it recovered after July 27, 2026, and appreciated around 1.2% from July 24, 2026, levels.

Monsoon Progress and Credit Growth Trends in India

The report stated that monsoon conditions improved significantly during July, reducing the nationwide rainfall deficit to 13%. Reservoir storage levels moved closer to normal levels, while kharif sowing was only 4.7% lower than the corresponding period in 2025, indicating favourable agricultural conditions.

It also noted that the Indian Ocean Dipole entered positive territory during the week ended July 26, 2026, which could support rainfall patterns if sustained. On the credit front, industry and personal loans accounted for nearly 63% of incremental lending during April-June 2026, with loans against gold jewellery contributing ₹74,200 crore, or 42%, of incremental personal loan growth.

Conclusion

SBI Research's report paints a picture of resilient economic activity during the opening quarter of FY27. The projected 7% GDP growth rate is supported by improving monsoon conditions, sustained credit expansion and policy measures aimed at maintaining financial stability.

At the same time, inflationary pressures and global uncertainties remain important factors influencing monetary policy decisions. The report highlights how economic growth, currency management and sectoral credit trends continue to shape India's macroeconomic landscape.

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