India's growth momentum seen slowing in second half of FY27

India's economy, which kicked off fiscal 2026-27 with robust 7.8 per cent year-on-year growth in the first quarter, is likely to lose pace in the second half as headwinds from financial tightening and energy prices mount, according to DBS Bank's macroeconomic assessment.

The slowdown reflects a combination of constrained liquidity conditions, elevated international energy prices and unfavourable statistical comparisons with the previous year, which together are expected to dampen economic activity across sectors. The momentum built by strong domestic demand, consumption, public capital expenditure and manufacturing performance in the opening quarter will face headwinds, analysts cautioned.

DBS projects full-year growth for FY27 to average 7.3 per cent, a moderation from the revised 7.8 per cent recorded in the preceding fiscal year. Despite the anticipated deceleration, high-frequency economic indicators continue to signal underlying strength in domestic activity. Metrics including goods and services tax collections, e-way bills, electricity consumption and digital payment volumes have held up well, suggesting consumer and business activity remain stable.

Meanwhile, broadening inflation pressures are likely to keep the Reserve Bank of India focused on price stability considerations, potentially influencing monetary policy decisions in the months ahead.