New Delhi, Jan 14 (UNI) India is poised for a relatively stable growth trajectory in FY26, supported by resilient domestic demand, government-led capital expenditure, and easing inflationary pressures, even as global uncertainties continue to cloud the outlook, according to SBI Capital Markets’ latest EcoCapsule report.
It projects India’s real GDP growth at 7.4 per cent year-on-year in FY26, driven by strong consumption and sustained public capex.
The rural demand has received a boost from favourable monsoons and tax reforms, while government capital spending has risen sharply up 28 percent year-on-year in the first eight months of FY26, with roads and railways leading the push.
Globally, growth has proven more resilient than initially feared despite heightened trade tensions.
While tariff announcements by the US had earlier triggered sharp downgrades to global growth forecasts, expectations have since stabilised, with global output projected to expand by 3.2% in calendar year 2025, supported by steady growth in the US, China, and India.
On the policy front, easing inflation has allowed central banks to cut rates, though long-term bond yields remain elevated. In India, inflation slipping below the Reserve Bank of India’s comfort band prompted a surprise rate cut in December 2025, capping a year marked by aggressive monetary easing.
Food and energy prices have been key contributors to the disinflation trend, while core inflation remains relatively sticky.
Financial markets, however, reflected mixed signals. Foreign portfolio investors recorded net equity outflows during the year, even as domestic institutional investors stepped in, helping capital markets deliver a resilient performance.
Equity IPO fundraising rose 8% year-on-year to Rs 1.72 trillion, while infrastructure investment trusts (InvITs) and REITs attracted record inflows.
Looking ahead, SBI Caps cautions that FY27 could test growth momentum as fiscal constraints tighten for both the Centre and states.
The report underscores the need for a stronger pickup in private sector capital expenditure to sustain medium-term growth, especially in emerging and technology-led sectors, as public finances face increasing pressure.
The outlook for 2026 is described as one of “tempered optimism,” less volatile than recent years, but still vulnerable to global shocks ranging from geopolitics to commodity price swings.
