SBI Projects 7.2% Q4 FY26 GDP Growth, FY27 Seen at 6.6%

State Bank of India Research projects India's real GDP growth at 7.2% in the fourth quarter of FY26, with full-year FY26 growth estimated at 7.5% and FY27 expected to moderate to 6.6%. The forecast reflects sustained domestic demand and improving high-frequency economic indicators, even as global growth faces pressure from Middle East tensions and supply chain disruptions.

SBI Research noted that 85% of 50 high-frequency indicators across consumption, agriculture, industry, and services showed acceleration in Q4 FY26, up from 83% in the prior quarter, aligning with NSO's advance estimate of 7.3%. Credit growth surged to 16.1% in FY26 from 11% in FY25, with Rs 29.5 lakh crore in incremental credit, largely driven by government spending and robust GST collections.

The report flagged external risks, including higher crude oil prices and rupee depreciation, warning that a $10 per barrel increase could widen the current account deficit by 30–35 basis points and reduce GDP growth by 20–25 basis points. Sustained oil prices around $100 per barrel in FY27 could anchor growth near 6.6%, while a rupee depreciation to Rs 95 per dollar may shrink India’s nominal GDP to $4.04 trillion, delaying the $5 trillion target to FY30.

SBI Research recommended structural measures to strengthen external accounts, including exploring diaspora bonds for external funding, though noted challenges due to current global yield conditions. It emphasized the need for careful structuring of such instruments with credible backing to ensure investor interest.

The report also urged India to prioritize AI-led productivity gains, estimating AI's growth potential at 4% to 10%, driven by IT services, SaaS, and cross-sector efficiency. It called for policy focus on competitiveness and global value chain integration. The projections will be reviewed as new economic data and geopolitical developments emerge.