India’s Economy Set for Strong 8% Growth in First Quarter, SBI Research Says

India’s economy is expected to maintain its strong growth momentum, with real GDP projected to expand by around 8 per cent in the first quarter of fiscal 2027, according to a report by SBI Research.

Released around India’s 80th Independence Day, the report said the economy continues to show resilience, supported by healthy credit demand, improving bank deposits and strong foreign-currency inflows.

Bank credit growth rose 19.3 per cent in the fortnight ended July 31, while deposit growth accelerated to 15.4 per cent. The improvement in deposits was supported in part by substantial inflows under the Foreign Currency Non-Resident (Bank) or FCNR(B) scheme.

According to the report, around $52.3 billion had been mobilised through the FCNR(B) scheme as of August 13. Despite the window being shortened by a month, SBI Research expects mobilisation under the scheme to reach as much as $70 billion by the end of the period.

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When other sources of overseas funding, including Overseas Foreign Currency Borrowings (OFCBs) and External Commercial Borrowings (ECBs), are taken into account, total mobilisation could reach $80 billion to $85 billion, the report estimated.

The inflows are also having an impact on the country’s foreign-exchange position. The Reserve Bank of India had already recouped around $31 billion of foreign-currency assets as of August 7, equivalent to nearly 55 per cent of the amount mobilised.

SBI Research said the rise in bank deposits and foreign-currency funding could also help influence government bond yields. It expects the 3-7 year segment of the government securities market to benefit the most, followed by the 7-10 year segment, due to factors such as maturity matching, carry and relatively lower supply pressure.

The report also pointed to a turnaround in foreign institutional investor flows. After a period of outflows, foreign investors have started returning to Indian markets following policy measures announced by the RBI and the government.

“India is and will continue to be one of the fastest-growing economies in the world,” SBI Research said.

Corporate performance has also remained relatively strong. The report analysed 2,257 listed companies outside the banking, financial services and insurance (BFSI) sector and found that their net sales rose 24 per cent in the first quarter of FY27 compared with the same period a year earlier. EBITDA increased 9 per cent, while profit after tax (PAT) grew 4 per cent.

The combination of robust credit demand, stronger deposits, foreign-currency inflows and resilient corporate performance suggests that domestic economic activity remains firm. If the momentum continues, the projected 8 per cent first-quarter growth could reinforce India’s position among the world’s fastest-growing major economies.