India’s economy likely expanded 7.3 percent in the first quarter of FY27, extending its run of above-7-percent growth to a fourth consecutive quarter despite disruptions caused by the West Asia crisis, according to a Moneycontrol poll of 17 economists.
The estimates for the June quarter ranged from 6.6 percent to 8 percent. SBI offered the most optimistic forecast, while Dun & Bradstreet projected the slowest expansion.
The median forecast was slightly lower than the 7.8 percent growth recorded in the fourth quarter of FY26.
Government will release GDP numbers for the first quarter on August 31.
Economists said strong domestic demand, government capital expenditure, manufacturing activity and services growth helped India withstand the impact of elevated energy prices, trade disruptions and global uncertainty.
“Growth in Q1FY27 has held up, with consumers largely protected from the fuel price shock,” said Gaura Sengupta, chief economist at IDFC First Bank, which estimated growth at 7.4 percent.
India’s ability to diversify its crude oil and liquefied natural gas supplies helped avert shortages, Sengupta said. Although higher raw-material costs affected the margins of listed companies, stronger sales limited the slowdown in profit growth.
High-frequency indicators covering industrial production, credit growth, automobile sales, goods and services tax collections and exports pointed to healthy economic activity during the quarter.
CareEdge, another rating agency, estimated GDP growth at 7.3 percent and gross value added growth at 7.4 percent. It expects utilities, manufacturing, mining, construction and financial, real estate and professional services to support growth.
“Construction activity is expected to strengthen in Q1 FY27, supported by robust government capital expenditure. Manufacturing also remained a key growth driver, supported by stronger IIP growth, improving GST collections, robust automobile demand, and a sharp recovery in non-oil, non-gold exports,” said Rajani Sinha, chief economist at CareEdge Group.
Radhika Rao, senior economist at DBS Bank, said the economy appeared to have weathered geopolitical disruptions better than initially expected.
The services sector remained supportive, reflected in robust bank credit expansion, purchasing managers’ indices staying in expansionary territory, higher e-way bill generation and resilient exports, Rao said. However, the higher oil import bill weighed on the merchandise trade balance and rising energy prices hurt the profitability of oil-marketing companies.
ICICI Securities Primary Dealership, which expects growth of 7.5 percent, said the economy performed better than feared despite the energy shock and weak exports to Gulf Cooperation Council countries.
“Only a partial burden of the shock was passed on to consumers, and domestic demand stayed strong nonetheless, reflecting upbeat sentiment,” said Abhishek Upadhyay, economist at ICICI Securities PD.
Growth may moderate after Q1
The median growth forecast for the full financial year stood at 6.8 percent, based on estimates from 16 economists. Forecasts ranged from 6.4 percent to 7.6 percent.
Economists expect growth to moderate in the coming quarters as an unfavourable base, higher inflation and the delayed transmission of external shocks weigh on consumption and corporate profitability.
HDFC Bank expects the economy to grow 6.9 percent in FY27 after expanding an estimated 7.5 percent in the first quarter.
“Beyond Q1, we expect GDP growth to be pulled down by a high base effect from last year,” said Sakshi Gupta, principal economist at HDFC Bank.
Sequential momentum could nevertheless hold up as the economy enters the festive season, Gupta said. Improved monsoon progress and a recovery in the area under cultivation have also reduced the risk of a sharp drag from uneven rainfall.
ICRA forecast Q1 GDP growth of 7 percent, Aditi Nayar chief economist of the ratings agency noted that healthy industrial and services data belied fears over the fallout from higher commodity prices. It expects gross value added growth to ease to 7.2 percent from 7.9 percent in the preceding quarter, with weaker net indirect taxes keeping GDP growth below GVA growth.
Dun & Bradstreet was more cautious, projecting first-quarter growth of 6.8 percent.
Its estimate reflects the impact of geopolitical tensions, trade disruptions, higher logistics and commodity costs, and an uneven recovery in private consumption, said Arun Singh, global chief economist at Dun & Bradstreet. Investment and infrastructure spending, however, continued to provide support.
Inflation risks persist
The median forecast for retail inflation in FY27 was 5 percent, based on projections from 12 economists. Estimates ranged from 4.7 percent to 5.2 percent.
Economists flagged elevated energy prices, uncertainty over transit through the Strait of Hormuz and uneven rainfall as the principal risks to inflation.
CareEdge expects consumer inflation to peak in the third quarter and average about 5 percent during FY27. While improving sowing activity and ample cereal stocks could provide some relief, weaker pulses sowing and India’s dependence on imported edible oils remain concerns.
India Ratings’ chief economist Devendra Kumar Pant said higher inflation could erode household purchasing power and weigh on consumption. It also expects the effects of the previous year’s GST rationalisation to continue influencing demand during the first half of FY27.
RBL Bank projected the highest full-year inflation rate of 5.2 percent.
“Inflation expected to rise to 6% in Q4, as weather and geo-political shocks drive 2nd order effects to inch up inflation,” said Anitha Rangan, chief economist, RBL Bank.