New Delhi: As India celebrated its 80th Independence Day, how does its economy look like? SBI Research, the economy research wing of the State bank of India, has circulated a note that lists the strengths of the economy. According to the biggest bank in the country, there are several and they range from a strong 8% GDP growth in the first quarter of the current financial year to a recovery in monsoons.
“Q1GDP growth at 8%, Record Capital inflows under RBI scheme at $57 bn and counting…credit growth at scorching 19%, deposit growth at 15%… FX Reserves at $707 bn… buoyant corporate results, monsoon recovery are all holding up…,” the research agency has mentioned in its note. Let’s have a quick look.
Credit demand surges
“Our macro story continues to remain one of resilience, even as global uncertainties remain elevated…. Growth outlook remains strong… Our Nowcasting model projects real GDP growth at 8% in Q1 FY27,” said SBI Research. It has put the blistering pace of credit growth and deposits growth at the top spot.
“As economy is in first track, credit demand continues and grew by 19.3% for the fortnight ended 31 July’26, while deposits growth also picked up the speed and grew by 15.4%, with the huge inflows of FCNR (B)…Till 13 August, $52.3 billion has mobilized under FCNR(B), which is remarkable… Even after one month truncation, overall, we expect $65–70 billion of FCNR(B) mobilization by the end of the scheme and, including OFCBs and ECBs, total mobilization could reach $80–85 billion…,” the analysts said.
Reversal of FII flows
SBI Research has also highlighted the return of foreign investment in the Indian stock market. “There is also a visible reversal in FII flows… from earlier outflows towards inflows following the measures announced by the RBI and Government…Domestic demand and corporate performance remain supportive. Among 2,257 listed non-BFSI companies, Q1 FY27 net sales, EBITDA and PAT grew by 24%, 9% and 4% YoY, respectively,” the agency heighted.
Forex reserves surges
The country’s forex reserves surged to a four-month high of $707 billion at the end of the first week of August. The reserves jumped $14.1 billion week-on-week, the highest since January 2026. RBI’s steps to attract dollar inflows announced in June include discounted hedging facilities for overseas borrowings by state-run firms and banks. The central bank also announced tax cuts on foreign investments in government bonds apart from a free-of-cost hedging facility for banks.
Improvement in rainfall
This year is marked by apprehensions of a super El Nino, which is expected to trigger food inflation. However, the rains seem to be slowly improving and the deficit in precipitation figures are tending down. “The monsoon story has also improved… nationwide deficit down to around 13%. Encouragingly, kharif sowing is only 2% below last year, pointing towards better irrigation coverage,” noted SBI Research.
If the monsoon improve, rural economy will get a tailwind and so will consumption levels in the economy, which happens to be the biggest driver of GDP growth.
