The growth of India’s economy in FY27 is anticipated to be driven by domestic factors such as consumption and credit, as per a report. Real GDP is projected to increase by about 7.2 per cent, with nominal GDP expected to improve by 11 per cent. Bank credit growth for the fiscal year is estimated at 13-14 per cent, with a rise from 9 per cent in May to 11.4 per cent by November 2025.
Household credit is predicted to surpass corporate credit, with segments reliant on credit-driven demand and premiumisation trends likely to perform well in the short term. In FY26, real GDP growth stood at around 7.5 per cent. The report highlighted that exports continue to be the weakest link, while inflation remains subdued.
The report also forecasted that the equity markets would follow the trends of 2025 into 2026. Emerging market equities and hard assets, especially industrial commodities, are expected to remain supported due to improving global growth. Indian markets, which have moderated in terms of valuation premiums compared to emerging markets, are anticipated to attract a fair share of flows.
Policy support is expected to bolster growth, leading to a gradual increase in equities. The report favored sectors such as power, gas transmission, capital goods, cement, and renewables. It projected CPI inflation to be around 4 per cent in FY27, with the RBI likely to maintain an extended pause. Government bond supply is set to increase to Rs 29 trillion, while Rupee depreciation is expected to slow to about 2 per cent, nearing Rs 92 per US dollar in FY27.
The mutual fund report highlighted that global growth has held up despite tariffs, supported by loose fiscal policies and AI-driven US capital expenditure. Europe has adopted a fiscally expansionary stance, while China remains reliant on exports as central banks approach the end of the easing cycle.
