India’s GDP growth for FY27 is projected to reach 7.2%, with a possible upward revision of FY26 growth to 7.8% from 7.6%, according to a report by HDFC Bank. The report indicates that the new GDP series validates India’s robust growth in the current fiscal year, with growth estimates expected to increase further based on strong high-frequency indicators in Q4.
The nominal growth for FY27 is forecasted to be between 10.5% and 11%, and private consumption in FY26 has surged over 8%, notably reaching 8.7% in Q3 after a slowdown to 5.8% in FY25. The report highlights that while spending on essentials like food, housing, utilities, and health continued to rise, 40% of the consumer spending basket experienced a deceleration in FY25, particularly on discretionary items such as clothing, footwear, and furnishings.
The report points out that investment growth has been adjusted downward in the new series, although it exhibited improvement in recent quarters after a sluggish start in the beginning of FY26. With an enhancement in consumption momentum and rising capacity utilization rates, the report anticipates a boost in investments for FY27, especially witnessing enhanced growth in manufacturing, financial, real estate, professional services, and hospitality sectors.
Addressing the debt to GDP ratio, the report mentions a current estimate of 57.5% for FY27 compared to 55.6% in the previous series, emphasizing the need for greater fiscal consolidation to achieve the FY31 target. Additionally, potential prolonged tensions in West Asia could lead to a significant surge in commodity prices like oil and LNG, impacting WPI forecasts and posing risks to other macroeconomic factors such as currency and CAD for FY27.
