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With the improving macro conditions, the preliminary estimate indicates that Q1 FY27 GDP for India may clock 7.0 per cent growth, according to a new report. 

In the last three policies, the Reserve Bank of India (RBI) downgraded Q1 FY27 GDP growth projection from 6.9 per cent to 6.6 per cent due to war in middle east.

“However, now we believe that situation has changed and Q1 growth print may be much better that anticipated,” said SBI Research in its report.

On the other hand, till April 2026, imported inflation was benign as impact of high global oil prices had not transferred to Indian consumer through petrol/diesel prices.

Consequently, “we now expect CPI trajectory (as of now) may indicate more than 5.0 per cent inflation for the next two quarters (Q1 FY27 settled at 3.9 per cent). FY27 projections are currently at 5 per cent though well under the RBI’s target range,” the report noted.

Despite a sluggish start and a 40 per cent rainfall deficit in June, July surplus showers reduced the overall nationwide shortfall to roughly 13 per cent only.

Except a few food-grain producing states (Bihar, Andhra Pradesh, etc.) all other states exhibited excellent rainfall in July (the most prominent month of sowing).

“IMD predict below-normal rainfall (less than 94 per cent of LPA) over the country during the second half of the Southwest Monsoon season (August-September),” said the report.

Meanwhile, El Nino has been underway since mid-June and continues to strengthen, with further intensification likely in the coming months. The strength of El Nino, in addition to the typical life cycle of an El Nino, suggests it may persist into autumn 2027.

At present, India has sufficient storage at important reservoirs (equal to normal, though less than last year) and the situation may improve as the monsoon progresses.

“Kharif sowing (so far) is only 4.7 per cent lower than the 2025 levels indicating better harvest and subsequently minimal/no impact on food inflation going forward. However, a late El Nino may impact the Rabi crops,” said the report.