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

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.

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