India’s economy is likely to record above-trend growth of 7.5% in FY27, while inflation stays low, Axis Bank said in its Economic Outlook 2026 report.
The bank attributed the outlook to a combination of supportive monetary policy, easing fiscal drag and sustained total factor productivity gains. According to Axis Bank, capital formation is expected to rebound, supporting a trend growth rate of around 7%.
Axis Bank expects headline inflation to average around 4% in FY27, even as growth strengthens. Median inflation has remained near 3% for 18 months, suggesting that underlying demand pressures remain moderate.
Policy rates are seen as having bottomed out, though liquidity conditions could ease further to strengthen monetary transmission. The report also noted that supply-side bond measures could help flatten the yield curve, with the 10-year yield projected near 6%.
On the external front, Axis Bank expects the current account deficit to widen modestly, while capital outflows seen earlier are likely to moderate.
