Investment Boom to Outpace Consumption in India's FY26 Economic Growth

In FY26, investments in India are set to surpass consumption, driven by government and RBI policy measures. Economic growth is projected to hit 6.5-7%, while improved rural consumption and stable private investments also contribute positively. Fiscal and monetary policies emphasize expansion, bolstering the growth trajectory.

Investment is anticipated to be the dominant force behind India's economic growth in the financial year 2025-26 (FY26), outstripping consumption, according to a report from SBI Mutual Fund. The findings indicate a steady enhancement in economic growth, particularly in the latter half of FY25, prompted by proactive government policies and interventions from the Reserve Bank of India (RBI).

The report projected that India's gross domestic product (GDP) could see a growth of 6.5-7% in FY26, marginally improved from an expected 6.5% in FY25. Although this forecast lags behind the 7.5-9% growth witnessed in FY22-FY24, it remains robust. The document noted that while government capital expenditure might not significantly increase, the momentum of corporate order books suggests a stable private investment scenario.

Improved rural consumption and increased government expenditures are poised to uplift the GDP. The report underscores a pivot in fiscal policy from consolidation to growth support, complemented by the RBI's monetary easing, including interest rate cuts and liquidity enhancements. Together, these strategic shifts aim to bolster economic expansion, with investments poised to outshine consumption in driving FY26's growth.

(With inputs from agencies.)