India’s domestic consumption to drive 7.2 pc real GDP growth in FY27: Report

New Delhi, Jan 6 The growth of India’s economy will be domestically driven by consumption and credit in FY27, with real GDP to rise about 7.2 per cent and nominal GDP improving by 11 per cent, a report said on Tuesday.

The report from SBI Mutual Fund stated that bank credit growth is projected at 13-14 per cent in FY27. Bank credit rose from 9 per cent in May to 11.4 per cent by November 2025, with aggregate credit likely to grow by 10.5-11 per cent in FY26.

Household credit is expected to outpace corporate, the fund house said, adding that segments reliant on credit-driven demand and premiumisation trends should outperform in the near term.

FY26 real GDP growth was around 7.5 per cent, the report said, noting that exports remain the weakest link even as inflation stays benign.

In equity markets, the fund house forecasted the trends of 2025 to continue into 2026.

"EM equities and hard assets, including industrial commodities, should stay supported after years of underperformance on the back of improving global growth," the report said.

As Indian markets moderated on valuation premiums relative to EMs, they should receive their fair share of flows, the report forecasted.

Policy support should help growth, which should help equities inch higher, even as equity supply caps gain, it said.

The firm preferred sectors such as power, gas transmission, capital goods, cement, and renewables.

CPI inflation was forecasted near 4 per cent in FY27, with the RBI likely to remain on an extended pause. Government bond supply will rise to Rs 29 trillion, and Rupee depreciation should slow to about 2 per cent, near Rs 92 per US dollar in FY27.

The mutual fund said that global growth held up despite tariffs so far in this fiscal, aided by loose fiscal policy and AI-led US capex.

Europe has turned fiscally expansionary, and China remains export-dependent as central banks near the end of the easing cycle, it noted.

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