India’s investment growth is expected to surpass consumption growth in the financial year 2025-26 (FY26), according to a recent report by SBI Mutual Fund. The report highlights a gradual economic recovery, driven by government policies and supportive measures from the Reserve Bank of India (RBI).
Investment to Lead Economic Growth in FY26
The SBI Mutual Fund report predicts that investments will outperform consumption in FY26. The Indian economy is showing signs of steady recovery, with GDP growth reaching 6.2% in Q3 FY25, up from 5.6% in the previous quarter.
Looking ahead, India’s GDP is expected to grow between 6.5% and 7% in FY26, compared to an estimated 6.5% in FY25. Although this is lower than the 7.5-9% growth seen between FY22 and FY24, it remains a stable and healthy expansion rate.
Key Drivers of GDP Growth in FY26
Several factors are expected to support India’s economic growth in the coming quarters, including:
- Improvement in rural consumption
- Higher government spending
- Supportive fiscal and monetary policies
Government and RBI’s Role in Economic Growth
Over the past two years, the government has focused on fiscal consolidation, while the RBI has prioritized inflation control and financial stability. However, there is now a shift towards supporting economic expansion through:
- Interest rate cuts by the RBI
- Increased liquidity in the market
- Relaxation of certain credit regulations
Although government capital expenditure (capex) may not see a major rise, strong corporate order books indicate a steady flow of private investments, helping sustain economic growth.
Nominal GDP Growth Expected to Rise
The report also projects nominal GDP growth to increase slightly to 10-11% in FY26, compared to 9-10% in FY25. This indicates strong economic momentum, supported by investment-led growth and policy measures.
India’s economy is set for stable growth in FY26, with investment playing a key role. The RBI’s supportive measures and government spending are expected to drive economic expansion. While private investments remain strong, rural consumption is also expected to improve, further strengthening the growth outlook. With GDP growth projected between 6.5-7%, India remains on a steady economic trajectory, ensuring long-term stability and development.
