India's Economic Growth Forecast

According to a recent SBI Mutual Fund report, investments in India are poised to grow faster than consumption by the financial year 2025-26 (FY26). This shift is attributed to a gradual improvement in economic growth during the second half of FY25, supported by government and Reserve Bank of India (RBI) measures.

GDP Growth and Investment Outlook

India's GDP grew by 6.2% in the third quarter of FY25, a rebound from 5.6% in the previous quarter. The report forecasts GDP growth to range between 6.5-7% in FY26, slightly up from an expected 6.5% in FY25. This indicates a stable and healthy economic expansion, despite being lower than the 7.5-9% growth recorded between FY22 and FY24.

Supporting Factors for Growth

Beyond investment growth, the report highlights several factors that could bolster GDP growth. These include an anticipated improvement in rural consumption and increased government spending, which could further stimulate economic activity. Additionally, the RBI's recent interest rate cuts, improved liquidity, and relaxed credit regulations, alongside the government's fiscal consolidation efforts, are expected to support economic growth.

Future Prospects

The report suggests that while government capital expenditure may not significantly increase, strong corporate order books indicate a stable private investment pipeline. Furthermore, nominal GDP growth could rise to 10-11% in FY26, up from 9-10% in FY25, signaling a positive outlook for India's economic future.