New Delhi: India’s economic growth in FY27 is expected to be driven largely by domestic consumption and credit expansion, with real GDP projected to grow by about 7.2 per cent and nominal GDP by around 11 per cent, according to a report by SBI Mutual Fund released on Tuesday.

The report said bank credit growth is likely to remain robust at 13–14 per cent in FY27. Bank credit growth improved from 9 per cent in May to 11.4 per cent by November 2025, while aggregate credit is expected to grow by 10.5–11 per cent in FY26.

Household credit is projected to grow faster than corporate lending, the fund house said, adding that sectors dependent on credit-led demand and premiumisation trends are likely to outperform in the near term.

According to the report, real GDP growth in FY26 stood at around 7.5 per cent. Exports continue to be the weakest component of growth, even as inflation remains under control.

In equity markets, SBI Mutual Fund expects trends seen in 2025 to extend into 2026. Emerging market (EM) equities and hard assets, including industrial commodities, are expected to remain supported following years of underperformance, aided by improving global growth.

The report noted that as Indian equity markets moderate valuation premiums relative to other emerging markets, they are likely to attract their fair share of global capital flows. Policy support is also expected to underpin economic growth, helping equities edge higher, even as increased equity supply limits sharp gains.

The fund house identified power, gas transmission, capital goods, cement and renewable energy as its preferred sectors.

Consumer Price Index (CPI) inflation is expected to hover around 4 per cent in FY27, with the Reserve Bank of India (RBI) likely to maintain an extended policy pause. Government bond supply is projected to rise to ₹29 trillion, while rupee depreciation is expected to slow to about 2 per cent, with the currency seen near ₹92 against the US dollar in FY27.

On the global outlook, the report said growth has remained resilient so far this fiscal year despite tariffs, supported by loose fiscal policy and artificial intelligence-led capital expenditure in the US. Europe has turned fiscally expansionary, while China remains export-driven as global central banks approach the end of the easing cycle.

IANS