India's GDP growth to beat RBI forecast? SBI sees 7.8% expansion in Q2; Moody's raises FY27 outlook

India's economy could grow faster than the Reserve Bank of India's (RBI) projections in the September quarter, with SBI Research forecasting GDP expansion of 7.8%, against the central bank's estimate of 7.2%. Separately, Moody's Ratings has upgraded India's full-year FY27 growth forecast to 7%, citing resilient consumption, improving investment and the economy's ability to withstand global energy shocks.

According to SBI Research's November 11 report, India's economic activity remained robust during July–September 2026, supported by manufacturing, services, corporate profitability and accelerating bank credit.

The research team used a dynamic factor model incorporating 54 high-frequency indicators to estimate second-quarter growth.

What is driving India's growth?

SBI Research noted that approximately 88% of 50 leading economic indicators showed acceleration in Q2 FY27, compared with 86% in the preceding quarter.

Manufacturing growth is projected at 8.7%, while services are expected to expand 9.7%, highlighting the continued strength of industrial and services activity.

Gross Value Added (GVA), which measures economic output across sectors, could grow between 8% and 8.2%.

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Corporate earnings also indicate improving business conditions. EBITDA and profit after tax of approximately 2,300 listed companies, excluding banking and financial services, increased 35% and 33%, respectively, year-on-year.

Bank lending remained another important growth driver. Scheduled commercial bank credit growth accelerated to 18.2%, while deposit growth reached 16.7% for the fortnight ended October 15.

SBI Research also expects nominal GDP growth of 11–11.5% in the September quarter.

Moody's raises India's FY27 growth forecast

Separately, Moody's Ratings upgraded India's FY27 economic growth projection to 7% from its earlier estimate of 6.5%.

"India's broad-based economic momentum and demonstrated resilience to the energy supply shock warrant upward revisions to our 2026-27 growth forecasts to 7 per cent from 6.5 per cent," Moody's said in its Global Macro Outlook 2027–28.

The agency highlighted robust consumption, improving investment conditions and strong macroeconomic fundamentals as factors supporting growth near 7% over the medium term.

It said India's diversified crude oil and gas supplies, substantial refining capacity and government measures to cushion consumers helped limit disruptions from the energy shock.

Moody's also pointed to stronger capital goods production, industrial credit growth and rising capacity utilisation as signs of a possible revival in private investment.

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What are the risks to growth?

Despite the optimistic projections, both assessments highlight potential economic challenges.

Moody's warned that household consumption remains vulnerable to persistent price pressures, with inflation approaching the upper end of the RBI's 2–6% target range.

A deficient southwest monsoon and strengthening El Niño conditions could also affect agricultural production and rural demand.

SBI Research estimates that adverse weather conditions could potentially reduce agricultural output by 3.86 crore tonnes across the Kharif and Rabi seasons.

Moody's further cautioned that tighter monetary policy could delay private investment recovery.

"With the RBI on track to raise rates further, tighter monetary policy could delay the recovery in private investment," it said.

What does this mean for RBI policy?

Stronger economic growth could give the RBI greater flexibility to prioritise inflation management, particularly if food and energy prices remain elevated.

However, SBI's 7.8% estimate relates specifically to Q2 FY27, while Moody's 7% projection covers the entire financial year.

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