India Seen Growing at 6.8% in FY27; Opportunity to Emerge as Global Transit Hub

New Delhi — India’s economy is expected to remain resilient, with growth projected at around 6.8 per cent in FY27 despite global uncertainties and geopolitical tensions, according to a report by State Bank of India Research.

The report noted that India entered the current phase of global geopolitical instability from a position of relative strength. It estimates GDP growth to stay in the range of 6.8–7.1 per cent, even as risks like a potential Super El Niño and ongoing conflicts could weigh on economic momentum.

On the fiscal front, the gross fiscal deficit for FY27 is pegged at ?16.95 lakh crore, or 4.5 per cent of GDP (based on 2022–23 levels). However, increased subsidy allocations of about ?60,000 crore and expected revenue losses of ?1.1 lakh crore due to excise duty cuts may push the total fiscal burden higher. As a result, the deficit could widen to nearly ?18.7 lakh crore.

Inflation is projected to average around 4.5 per cent for the year, though it may rise above this level during the second and third quarters. Even so, it is expected to remain broadly within the target range set by the Reserve Bank of India.

The report also suggests that India’s 10-year government bond yield could remain in the 6.75–7.0 per cent range, with a potential downward bias if geopolitical conditions stabilise. Factors such as higher borrowing requirements, volatile oil prices, and persistent global risks are expected to influence yields.

Interestingly, ongoing disruptions in the Middle East could open up a strategic opportunity for India. With certain air routes becoming less viable, the country—along with China—could position itself as an alternative transit hub for international travellers. To capitalise on this shift, the report highlights the need for significant investments in airport infrastructure, better connectivity, and enhanced passenger experience.

With inputs from IANS