Intro: SBI Research stated improving economic conditions could push first-quarter growth past earlier expectations.
New Delhi
India’s economy may grow by 7 per cent in the first quarter of FY27, supported by improving macroeconomic conditions despite global tensions and concerns over the impact of geopolitical developments, according to a report by SBI Research.
The preliminary assessment suggests that first-quarter growth could be stronger than earlier estimates. In its previous policy projections, the Reserve Bank of India (RBI) had reduced its Q1 FY27 GDP growth forecast from 6.9 per cent to 6.6 per cent, citing uncertainties arising from the conflict in the Middle East.
However, SBI Research said the economic situation had improved and the first-quarter growth figure could exceed earlier expectations.
The report noted that imported inflation remained relatively contained until April 2026, as higher global crude oil prices had not been fully passed on to Indian consumers through petrol and diesel prices.
India’s consumer price inflation for the first quarter of FY27 stood at 3.9 per cent. The report expects inflation to remain above 5 per cent during the next two quarters, while the full-year FY27 projection is currently estimated at around 5 per cent, within the RBI’s target range.
The monsoon season also showed signs of improvement. Although India recorded a rainfall deficit of nearly 40 per cent in June, surplus rainfall in July reduced the nationwide deficit to around 13 per cent.
Most states received favourable rainfall during July, an important month for kharif sowing. Kharif crop sowing was only 4.7 per cent lower than the level recorded in 2025, indicating the possibility of a better harvest and limited pressure on food inflation.
However, the report warned that a strengthening El Niño could affect rainfall during the second half of the monsoon season and may pose risks to rabi crops. India’s major reservoirs currently hold water levels close to normal, and the situation may improve further as the monsoon progresses.
BOX
Monsoon recovery tempers inflation risks
India’s FY27 inflation is projected near 5%, despite expected Q2 and Q3 spikes. While June saw a 40% rainfall deficit, July surpluses boosted kharif sowing. However, a strengthening El Niño threatens the second half of monsoon and upcoming rabi crops.