India’s economy is projected to grow at a robust 8% in the first quarter of FY27, driven by strong domestic demand, industrial activity, and government spending, surpassing official forecasts amid optimistic indicators.
SBI Research expects India’s economy to gather pace in the first quarter of financial year 2027, with real GDP growth potentially reaching 8%, according to a report published on August 11. That estimate sits above the Reserve Bank of India’s 7% projection and reflects what the bank research arm describes as broad-based momentum across consumption, industry and services.
The report says 86% of the 50 leading indicators it tracks showed acceleration in the quarter, up from 69% in the same period a year earlier. Its nowcasting model, which uses 54 high-frequency measures across agriculture, manufacturing and services, also points to stronger growth. SBI Research added that domestic demand stayed resilient through the April-to-June period, with passenger vehicle sales rising 24.1%, electric vehicle registrations up 55.3%, electricity demand increasing 11.5% and consumer credit expanding 15.8% in June.
Industrial and services activity also remained supportive. According to the report, June growth in the Index of Industrial Production rose to 7.3%, while corporate industrial credit growth reached 19.2%. Cement output climbed 9.8% and electricity generation rose by the same margin. On the services side, exports increased 13.3% and cargo traffic at airports grew 22.3%, while bank credit growth accelerated to 18.6%.
The outlook was further helped by government spending and improving weather, SBI Research said. Central government capital expenditure reached 27.8% of budget estimates in the quarter, up from 24.5% a year earlier, while spending by 20 states also increased. The report noted that a sharp rainfall shortfall in June was partly offset by surplus rain in July and normal rainfall in August, reducing the overall deficit to about 12%. That view is broadly consistent with other recent SBI Research estimates reported by Economic Times and other outlets, which put FY27 growth in a lower range of 6.6% to 7.1%, underscoring how much the outlook may depend on the pace of domestic demand, inflation, crude prices and global conditions.
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