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India FY27 Growth Seen Averaging 7.3% Amid Inflation Risks
An economist at DBS Bank expects India’s economy to grow strongly in FY27.
The forecast is for average growth of 7.3 percent.
The economy grew 7.8 percent in the first quarter of the fiscal year.
People’s spending, government investment and factory production helped growth.
However, growth could slow later because borrowing conditions may become tighter and energy prices are high.
Inflation rose to 4.8 percent in August, and some food prices also increased.
Weak rainfall and El Niño risks could affect future crops and prices.
The Reserve Bank of India will therefore pay close attention to inflation while managing the extra money flowing through banks.
DBS Bank expects India’s FY27 growth to average 7.3%, after Q1 growth of 7.8% year-on-year.
Resilient domestic demand, consumption, public capital spending and manufacturing supported the strong start.
Growth may moderate later in FY27 as tighter financial conditions, high energy prices and base effects weigh on momentum.
August inflation rose to 4.8%, with food, energy and transport pressures expected to keep inflation above 5% in the second half.
Foreign-currency inflows lifted reserves above $780 billion but created surplus-liquidity challenges for the Reserve Bank of India.
- Who
- DBS Bank Senior Economist and Executive Director Radhika Rao provided the outlook; the Reserve Bank of India is managing inflation and banking-system liquidity.
- What
- DBS Bank forecasts average India FY27 growth of 7.3% while warning of elevated inflation and liquidity-management challenges.
- Where
- India, with the statement issued from New Delhi.
- When
- The outlook was reported on Tuesday and covers fiscal year FY27; Q1 FY27 growth was 7.8% year-on-year.
- Why
- Growth is supported by domestic demand, consumption, public capital spending, manufacturing and capital inflows, while inflation risks, energy prices and tighter financial conditions could weigh on the economy.
Key facts
- FY27 growth forecast
- 7.3% average growth, according to DBS Bank
- Q1 FY27 growth
- 7.8% year-on-year
- August inflation
- 4.8%
- Expected second-half inflation
- Above 5% in the second half of FY27
- Foreign-exchange reserves
- Above $780 billion
- Special swap-window inflows
- $143 billion, including $133 billion through FCNR (B) deposits
- FY27 current-account deficit
- Around 1.1% of GDP
Quotes
Radhika Rao
Senior Economist and Executive Director at DBS Bank
“High-frequency indicators such as GST collections, e-way bills, electricity demand and digital payments continue to hold up. However, growth is expected to moderate in the second half of FY27 as tighter financial conditions, elevated energy prices and base effects weigh on momentum.”
thehansindia.com
Sources
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