India GDP growth FY27: Jefferies sees 6.5-7% real expansion on credit surge
Synopsis
Jefferies' GREED & Fear report has upgraded India's economic outlook, forecasting 6.5–7% real GDP growth in FY27 — stronger than anticipated just six months ago. With corporate lending up 21.6%, MSMEs at 24.9%, and power demand surging from 1.8% to 9.4%, the data suggests India's long-awaited private capex cycle may finally be arriving.
Key Takeaways
Jefferies projects India's real GDP growth at 6.5–7 per cent in FY2026-27 , with nominal GDP at 11–12 per cent .
Bank credit growth accelerated to 17.8 per cent year-on-year in July ; MSME lending surged 24.9 per cent .
Corporate lending grew 21.6 per cent , with Jefferies noting the private sector capex cycle may finally be materialising.
GST collections rose 14.8 per cent year-on-year in August ; power demand growth jumped to 9.4 per cent in April–August from 1.8 per cent in Q4 FY26.
India's fiscal deficit is projected at 4.3 per cent of GDP this fiscal year, on a consolidation path.
Earnings growth is forecast to rise from 14 per cent in FY27 to 17 per cent in FY28 , according to Mahesh Nandurkar of Jefferies.
India is on track to achieve real GDP growth of 6.5–7 per cent in the current fiscal year FY2026-27, with nominal GDP growth projected at 11–12 per cent, according to the latest GREED & Fear report released by global brokerage Jefferies. The forecast, stronger than what the firm had anticipated six months ago, is underpinned by broad-based credit expansion, resilient domestic demand, and improving macroeconomic activity across sectors.
Credit Growth Powers the Outlook
Bank credit growth accelerated to 17.8 per cent year-on-year in July, with multiple segments outperforming. Lending to micro, small and medium enterprises (MSMEs) surged 24.9 per cent, while credit to industry rose 20 per cent and loans to the services sector climbed 22.9 per cent. Corporate lending expanded 21.6 per cent over the same period.
Jefferies noted that the pickup in corporate lending carries particular significance. 'The pickup in corporate lending also suggests that the long anticipated private sector capex cycle may finally be happening,' the report stated — a development that analysts have awaited for several years.
Earnings Growth Set to Accelerate
Mahesh Nandurkar, Head of India Research at Jefferies, projected that earnings growth will rise from 14 per cent in the current fiscal year to 17 per cent in FY2027-28, beginning 1 April 2027. The improving earnings trajectory reflects both top-line demand recovery and credit-driven capital formation across the economy.
Demand Indicators and Fiscal Health
Domestic demand indicators corroborate the optimistic growth narrative. GST collections increased 14.8 per cent year-on-year in August, while power demand growth accelerated sharply to 9.4 per cent during April–August, compared with just 1.8 per cent in the January–March quarter — a signal of broad economic reactivation.
On the external front, strong foreign currency inflows bolstered reserves. The Reserve Bank of India (RBI) mobilised a better-than-expected $136 billion in foreign currency deposits from non-resident Indians (NRIs) under a dedicated initiative, adding a layer of external sector resilience.
Fiscal Consolidation on Course
Jefferies also highlighted that the government's fiscal consolidation efforts remain firmly on track. The fiscal deficit is projected at 4.3 per cent of GDP in FY2026-27, with a further narrowing expected in subsequent years. This comes amid sustained capital expenditure by the Centre, which has been a key demand driver over recent quarters.
Taken together, the data points paint a picture of an economy that has not only weathered global headwinds but is accelerating into the second half of the fiscal year — with the private capex revival, if sustained, potentially marking a structural inflection point for India's medium-term growth story.
Point of View
Which has been 'imminent' for several years running, may this time have actual balance-sheet backing. The caveat is that credit-driven growth can flatter activity data without translating into durable productive capacity if the underlying projects are consumption-linked rather than investment-linked. India's fiscal consolidation trajectory also deserves scrutiny: a 4.3% deficit target is credible, but it is being achieved partly on the back of strong GST buoyancy that could prove cyclical. The real test of this upgrade will come in the capital goods and employment data over the next two quarters.
NationPress
18 Sept 2026
Frequently Asked Questions
What GDP growth has Jefferies projected for India in FY27?
Jefferies has projected real GDP growth of 6.5–7 per cent for India in FY2026-27, with nominal GDP growth expected at 11–12 per cent. The brokerage noted the outlook is stronger than it had anticipated six months ago.
Why is bank credit growth significant in Jefferies' India report?
Bank credit grew 17.8 per cent year-on-year in July, with MSME lending up 24.9 per cent and corporate lending rising 21.6 per cent. Jefferies said the surge in corporate credit suggests India's long-awaited private sector capital expenditure cycle may finally be underway.
What is India's fiscal deficit projection for FY27?
Jefferies has projected India's fiscal deficit at 4.3 per cent of GDP for FY2026-27, with further consolidation expected in subsequent years. The government's consolidation efforts are described as being on track.
How does the Jefferies earnings growth forecast look for Indian companies?
Mahesh Nandurkar, Head of India Research at Jefferies, projected earnings growth of 14 per cent in FY27, rising to 17 per cent in FY28. The acceleration reflects improving demand and credit-driven investment activity.
What domestic demand indicators support India's growth outlook?
GST collections rose 14.8 per cent year-on-year in August, and power demand growth accelerated to 9.4 per cent in April–August from just 1.8 per cent in January–March. Additionally, the RBI initiative mobilised $136 billion in NRI foreign currency deposits, strengthening the external sector.
