Mumbai, Dec 16 (NationPress) India's economic development is anticipated to gain momentum and remain vigorous in the upcoming years, with GDP projected to grow by 7.5 percent in FY27, all while maintaining control over inflation, as per Axis Bank's Economic Outlook 2026 released on Tuesday.

The report, penned by Neelkanth Mishra, Chief Economist at Axis Bank and Head of Global Research at Axis Capital, indicates that India has the potential to outpace its long-term growth trend without instigating inflationary pressures.

This potential arises from the economy's sufficient unused capacity, or slack, enabling a smooth rise in growth.

Axis Bank predicts that India will surpass most global counterparts and exceed market forecasts, establishing itself as the fastest-growing large economy worldwide.

The optimistic forecast is bolstered by a decrease in government financial pressures, reduced borrowing costs, and a supportive monetary policy.

The report further emphasizes that ongoing structural reforms and regulatory simplifications will play a crucial role in sustaining medium-term growth.

A significant catalyst for this growth will be a renewed surge in investment activities. With corporate balance sheets improving, low capital costs, and factories operating at high capacity, businesses are anticipated to ramp up capital expenditures in FY27.

This new investment cycle is expected to amplify economic momentum.

The bank's economists also foresee consistent productivity gains and a revival in capital formation, collectively supporting a long-term trend growth rate of approximately 7 percent.

Despite the growth exceeding this trend, inflation is anticipated to remain stable.

Axis Bank projects headline inflation to hover around 4 percent in FY27. Although food prices might experience a slight rebound, core price pressures remain subdued.

The report highlights that median inflation, which more accurately reflects core price trends, has remained close to 3 percent over the past 18 months.

This indicates limited demand pressures, allowing the economy to expand without overheating.

On monetary policy, the report suggests that policy interest rates are nearing their lowest levels. However, an increase in money supply could still enhance credit flow to the economy.

The bank also anticipates supply-side measures, like a higher issuance of short-term government securities, to alleviate the yield curve.

Consequently, the 10-year government bond yield is forecasted to approach 6 percent in FY27.