SBI Research sees Q1 FY27 GDP growth at 8%, beats RBI’s 7% forecast; 86% indicators accelerate

India’s economic growth could remain stronger than expected in the first quarter of FY27, with SBI Research projecting real GDP growth at around 8%, one percentage point above the RBI’s 7% projection. The estimate comes ahead of the official GDP data and is based on a broad assessment of high-frequency indicators covering consumption and demand, agriculture, industry, services, finance and other parts of the economy. SBI Research said almost all major leading indicators corroborate its 8% growth estimate.

The key signal behind the forecast is the broad-based acceleration visible across the economy. SBI Research tracks 50 leading indicators covering consumption and demand, agriculture, industry, services and other sectors. Of these, 86% showed acceleration in Q1 FY27, compared with 69% in Q1 FY26. The report’s historical mapping also shows that the share of accelerating indicators has increased alongside stronger GDP growth in recent quarters.

Consumption and demand remain resilient

Consumer demand is one of the major pillars supporting the higher GDP estimate. SBI Research’s Q1 FY27 data shows strong growth across several high-frequency indicators.

Domestic passenger vehicle sales grew 24.1% year-on-year in June 2026, following growth of 27.3% in May. Consumer credit expanded 15.8% in June, while domestic two-wheeler registrations increased 18.7% and three-wheeler sales rose 26.1%.

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The electric mobility segment also recorded strong momentum. Electric vehicle registrations jumped 55.3% in June, compared with 38.7% in May. Electricity demand grew 11.5%, while diesel consumption increased 6.2%. These indicators, according to SBI Research, point to continued resilience in consumption and demand.

Industrial activity

The industrial sector also showed improvement during Q1 FY27, although some pockets remained weak. IIP growth accelerated to 7.3% in June, up from 5% in May and 4.9% in April. Corporate industry credit growth strengthened to 19.2% in June, suggesting increased financing activity.

Cement output grew 9.8% in June, while electricity generation increased 9.8%. Finished steel consumption rose 7.7% and steel output grew 4.6%. Manufacturing PMI remained in expansion territory at 54.2.

However, not every indicator was positive. Bitumen consumption contracted 18.4% in June after registering even sharper declines in April and May, while coal output remained subdued during parts of the quarter. SBI Research nevertheless described overall industrial growth as satisfactory, barring a few indicators.

Services sector shine

The services sector is another important reason behind SBI Research’s stronger Q1 GDP outlook. Services PMI stood at 57.3 in June, while service exports grew 13.3%. Airport cargo traffic increased 22.3% and port cargo traffic rose 9.3%.

GST e-way bill generation also increased 14.5% in June, while toll collection rose 6.2%. Bank deposits grew 13.3% and bank credit expanded 18.6%, indicating continued financial activity. SBI Research noted that, except for some weakness in freight and passenger traffic, most services indicators were supportive of impressive Q1 growth.

Government capex and bank credit

Government spending is providing another layer of support. Capital expenditure by 20 states grew 5.5% year-on-year in Q1 FY27, while central government capex rose 23.7%. Central capex also accounted for 27.8% of budget estimates in Q1 FY27, compared with 24.5% in Q1 FY26.

Bank lending has also remained strong. Scheduled commercial bank credit growth accelerated to 17.7%, while deposits grew 12.7% for the fortnight ended July 15, 2026. SBI Research expects aggregate deposits to grow 14.5%-15% in FY27 and credit growth to reach 16%-17%.

Monsoon improves, but rupee under pressure

Improving monsoon conditions could provide additional support to the economy. A nearly 40% rainfall deficit in June was partly offset by surplus rainfall in July and normal rains in August, bringing the overall deficit down to around 12%. SBI Research said positive Indian Ocean Dipole conditions could also partly offset the impact of El Nino.

At the same time, the report flagged rupee depreciation as a financial-stability concern. The currency breached ₹96 against the US dollar before recovering and subsequently moving around ₹95-95.5. SBI Research said a calibrated RBI policy response, including timely intervention and well-calibrated policy signals, would be important to contain further depreciation.