The report notes that economic growth has already picked up in FY26 as the drag from fiscal consolidation and tight liquidity conditions witnessed in FY25 has begun to ease.
File Photo: IANS
India’s economy is expected to grow at an above-trend pace of 7.5% in FY27, supported by easing fiscal and monetary conditions, low inflation, and ongoing regulatory reforms, according to Axis Bank’s India Economic Outlook 2026 report.
The report notes that economic growth has already picked up in FY26 as the drag from fiscal consolidation and tight liquidity conditions witnessed in FY25 has begun to ease.
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Headline inflation is projected to average around 4% in FY27, with underlying price pressures remaining subdued due to persistent economic slack.
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The report highlights that median inflation, considered a better indicator of demand-driven pressures, has remained close to 3% over the past 18 months, suggesting limited risk of overheating despite faster growth.
Despite the expected acceleration in economic activity, inflation is likely to remain well anchored. Axis Bank attributes this to weak demand-side pressures and ample supply-side buffers.
India is also projected to maintain its position as the world’s fastest-growing large economy, the report said.
Regulatory easing measures including improvements in the ease of doing business, the rollback of select quality control orders, and the implementation of labour reforms are expected to support medium-term growth and enhance investor confidence.
On the fiscal front, the pace of consolidation is expected to slow further, with the fiscal deficit projected to narrow to around 4.2% of GDP in FY27.
Improved debt management and rising demand for government securities could help the benchmark 10-year government bond yield drift lower to around 6.1% by FY27, the report added.
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