India set for FY27 real GDP growth of 7.5%: Axis Bank chief economist

He projected the trend GDP growth at 7 per cent in the bank’s ‘Outlook 2026’ report.

Mishra, who also heads the global research division of Axis Capital, and the bank’s economic research team, maintains that the economy can sustain above-trend growth without inflationary pressures given economic slack.

The team feels improved financials, low cost of capital, high-capacity utilisation will lift capital expenditure in FY27.

Sustained total factor productivity (TFP) gains and a rebound in capital formation support a 7-per cent trend growth outlook.

Median inflation, a better gauge of underlying price pressures, has been stable at close to 3 per cent for 18 months, signalling persistent slack in the economy.

Axis Bank expects FY27 headline inflation of nearly 4 per cent despite above-trend growth and a likely rebound in food prices, but economic slack will persist.

Policy rates have likely bottomed, but money supply can rise further to aid monetary transmission and credit growth; supply-side measures can reduce the yield curve steepness, he said.

Axis Bank expects the current account deficit to widen a notch, to 1.2 per cent of GDP in FY26 and 1.3 per cent in FY27, while the surge in capital outflows seen in the second and third quarters of FY26 will likely abate.

ALCHEMPro News Desk (DS)