New Delhi: With the improving macro conditions, the preliminary estimate indicates that Q1 FY27 GDP for India may clock 7.0 per cent growth, according to a new report.
In the last three policies, the Reserve Bank of India (RBI) downgraded Q1 FY27 GDP growth projection from 6.9 per cent to 6.6 per cent due to the war in the Middle East.
“However, now we believe that the situation has changed and Q1 growth print may be much better than anticipated,” said SBI Research in its report.
Inflation Outlook Remains Within RBI’s Target Range
Till April 2026, imported inflation remained benign as the impact of high global oil prices had not been passed on to Indian consumers through petrol and diesel prices.
Consequently, “we now expect the CPI trajectory (as of now) may indicate more than 5.0 per cent inflation for the next two quarters (Q1 FY27 settled at 3.9 per cent). FY27 projections are currently at 5 per cent, though well under the RBI’s target range,” the report noted.
Monsoon Improves, Kharif Sowing Shows Positive Trend
Despite a sluggish start and a 40 per cent rainfall deficit in June, surplus rainfall in July reduced the overall nationwide shortfall to around 13 per cent.
Except for a few foodgrain-producing states such as Bihar and Andhra Pradesh, most states recorded good rainfall during July, the crucial sowing month.
The India Meteorological Department (IMD) has predicted below-normal rainfall (less than 94 per cent of the Long Period Average) during the second half of the southwest monsoon season (August-September), the report said.
El Niño May Affect Rabi Crops Later
Meanwhile, El Niño has been active since mid-June and is expected to strengthen further in the coming months, with the possibility of continuing into autumn 2027.
At present, India has adequate water storage in major reservoirs, which is close to normal levels, and the situation is expected to improve as the monsoon progresses.
“Kharif sowing (so far) is only 4.7 per cent lower than the 2025 levels, indicating a better harvest and subsequently minimal or no impact on food inflation going forward. However, a late El Niño may impact the Rabi crops,” the report said.