India Likely to See Above-Trend Growth in FY27: Axis Bank

India is likely to sustain above-consensus economic growth of 7.5% in FY27, with inflation remaining moderate, Axis Bank said in its Economic Outlook 2026.

According to the report, receding fiscal drag, supportive monetary policy and ongoing structural reforms are expected to drive growth above long-term trends. Axis Bank noted that improved financial conditions, high capacity utilisation and a rebound in capital formation would support stronger capital expenditure in FY27.

The bank expects headline inflation to average about 4% in FY27, despite a likely recovery in food prices. Median inflation has stayed near 3% for the last 18 months, signalling continued economic slack.

On monetary conditions, Axis Bank said policy rates have likely bottomed, though money supply could expand further to support credit growth. The bank added that supply-side measures such as increased issuance of treasury bills and shorter-duration bonds could help reduce the steepness of the yield curve.

The report expects the current account deficit to widen slightly to 1.3% of GDP in FY27, while pressure from capital outflows is likely to ease.