NEW DELHI: Investments in India are expected to grow at a faster pace than consumption in the financial year 2025-26 (FY26), a report by SBI Mutual Fund said. The report highlighted a gradual improvement in economic growth during the second half of FY25, fueled by supportive measures from the government and the Reserve Bank of India (RBI).
“Between consumption and investment, investment could be a likely out-performer in FY26”. the report said.
In the third quarter of FY25, India’s GDP grew by 6.2 per cent, bouncing back from a revised figure of 5.6 per cent in the previous quarter.
In the upcoming financial year 26, the report estimated GDP growth to fall in the range of 6.5-7 per cent, compared to an expected 6.5 per cent in FY25. While this is lower than the 7.5-9 per cent growth recorded between FY22 and FY24, it remains a stable and healthy expansion rate for the economy.
Apart from growing investments, the report also threw light on other factors that could support GDP growth in the coming quarters. Rural consumption is expected to improve, and higher government spending could provide an additional boost to economic activity.
In the past two years, the government’s fiscal policy has focused on consolidation, while the RBI has prioritised inflation control and financial stability. However, there is now a shift towards actively supporting economic growth.
The RBI has begun cutting interest rates, improving liquidity, and relaxing certain credit regulations. On the fiscal front, the government is maintaining its consolidation efforts but is expected to better meet its spending targets in FY26 compared to FY25 to shape the grpowth in upward direction.
While government capital expenditure (capex) may not see a major increase, strong corporate order books indicate a stable private investment pipeline. The report also suggested that nominal GDP growth could rise slightly to 10-11 per cent in FY26, up from 9-10 per cent in FY25.