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Key Points

According to a State Bank of India report, India is set to maintain its status as the fastest-growing major economy by FY26. This prediction is based on strong macroeconomic fundamentals and a robust financial sector, alongside a commitment to sustainable growth. Despite external and geopolitical risks, SBI remains optimistic, noting that anticipated domestic savings will adequately finance future growth. The report also highlights the significant growth in capital formation and a solid performance by various sectors, signaling a positive outlook.

Key Points: Indian Economy Set to Lead Global Growth by FY26 Says SBI

  • SBI foresees India's economy leading global growth by FY26
  • Backed by strong macroeconomic fundamentals and robust financial sector
  • Anticipates continued growth without demand-induced price pressures
2 min read

Indian economy poised to remain fastest-growing one in FY26: SBI report

SBI projects India's economy as fastest-growing by FY26, citing strong macroeconomic fundamentals.

"We do not expect demand induced pressure on prices in FY26. - Dr Soumya Kanti Ghosh, SBI"

New Delhi, May 31

The Indian economy is poised to remain the fastest-growing major economy in FY26 by leveraging its sound macroeconomic fundamentals, robust financial sector and commitment towards sustainable growth, according to a State Bank of India (SBI) report.

With higher anticipated saving based on latest RBI annual report, the domestic finances will be sufficient to finance the anticipated growth and “we do not expect demand induced pressure on prices in FY26,” said Dr Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.

The downside to growth emanate from external and geopolitical factors, Ghosh added.

From the expenditure side, the GDP growth of 7.4 per cent in Q4 was supported by strong uptick in the capital formation which registered a 9.4 per cent annual growth.

The recovery in capital formation was on account of revival in core sector in Q4 as evident from high frequency indicators. The overall growth in capital formation for FY25 now stands 7.1 per cent.

India’s economy grew by 7.4 per cent in Q4 FY25 as against 8.4 per cent growth in same quarter last fiscal. Riding on Q4 numbers, the annual FY25 growth is estimated at 6.5 per cent.

Almost all sectors exhibited better growth numbers in Q4 FY25. While industry grew by 6.5 per cent, the services sector grew by 7.3 per cent in Q4. Within industry during Q4, construction sector grew by whopping 10.8 per cent (6-quarters high) and manufacturing sector increased by 4.8 per cent.

The private consumption maintained its health run in Q4 although there was sequential slow rate of growth in Q4. Overall, the private consumption registered a growth of 7.2 per cent for FY25.

The export demand was healthy for whole year, registering a growth of 6.3 per cent, while the imports contracted for the whole year by 3.7 per cent.

According to the SBI report, this growth was front-loaded because of export push amidst US tariffs uncertainty. The highest contraction in imports happened in Q4 at 12.7 per cent was another factor in pulling the overall GDP growth to 7.2 per cent in Q4.

- IANS

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Reader Comments

R
Rahul K.
Great news! But we must ensure this growth reaches rural areas too. Construction sector boom is good, but farmers are still struggling with low MSPs. Need balanced development 🇮🇳
P
Priya M.
The manufacturing growth at just 4.8% is concerning. Make in India needs more push! We can't rely only on services sector. Need more factories and jobs for semi-skilled workers.
A
Amit S.
Construction sector growing at 10.8% is amazing! Shows infrastructure push is working. Hope this means better roads, metros and housing for middle class families like mine 🙏
S
Sunita R.
Good numbers but inflation is still pinching our pockets. GDP growth should translate to lower prices of daily essentials - atta, dal, petrol. That's when common people will feel the growth!
V
Vikram J.
The export growth despite global uncertainty is commendable! Shows Indian products are becoming competitive. But we must reduce dependence on China for imports - that 12.7% contraction is silver lining.
N
Neha P.
As a small business owner, I'm happy to see private consumption holding up. But banks need to give easier loans to MSMEs. Paperwork is still too much! Growth should help grassroots entrepreneurs too 💼

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