India is expected to retain its position as the fastest-growing major economy in FY26, with GDP growth estimated between 6.3% and 6.5%, according to a report by the State Bank of India (SBI). This growth is supported by strong macroeconomic fundamentals, a robust financial sector, and increased domestic savings, which are expected to fuel investment without causing inflation. In FY25, Q4 growth reached 7.4%, driven by a surge in capital formation, especially in construction and manufacturing. As per the report, despite external and geopolitical challenges, India seems well placed to sustain a stable and strong growth path in the year ahead.
According to a report by the State Bank of India (SBI), India is expected to remain the fastest-growing major economy in FY26, supported by strong macroeconomic fundamentals, a resilient financial sector, and a commitment to sustainable development.
The report stated that the Indian economy is likely to maintain its position as the fastest-growing major economy in FY26, with GDP growth projected to be in the range of 6.3 to 6.5 per cent.
It also highlights that improved domestic savings, as noted in the latest Reserve Bank of India (RBI) annual report, will be sufficient to support growth without triggering demand-driven inflation. The report emphasized that India’s growth momentum is expected to continue, driven by solid macroeconomic fundamentals, a resilient and well-capitalized financial sector, and a sustained commitment to long-term development objectives. These factors are likely to support economic stability despite global uncertainties.
However, Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser at SBI, noted that external and geopolitical factors remain the key downside risks to growth.Â
India recorded robust Q4 FY25 growth
India’s overall economic growth stood at 6.5% in FY25, with Q4 showing a robust 7.4% rise, though slightly lower than the 8.4% recorded in the same quarter of the previous year. The rebound was attributed to a revival in the core sector, supported by high-frequency indicators.Â
For the full fiscal year FY25, capital formation increased by 7.1%.
Almost all sectors performed well in Q4. Industry grew by 6.5%, while the services sector expanded by 7.3%.Â
Within the industrial segment, the construction sector led with a remarkable 10.8% growth — the highest in six quarters — followed by manufacturing at 4.8%.
Private consumption remained strong throughout the year, registering a 7.2% growth, despite a modest sequential slowdown in Q4.Â
Exports showed solid growth of 6.3% over the year, while imports contracted by 3.7%. According to the SBI report, the export growth was front-loaded due to concerns over potential U.S. tariffs. A sharp 12.7% decline in imports during Q4 also played a key role in lifting the GDP growth to 7.2% for the quarter.
According to official data, GST revenue figures were highlighted as a key indicator of sustained economic momentum. In January 2025, gross GST collections stood at ₹1.96 lakh crore, marking a 12.3% rise compared to the same period last year. February saw collections increase to ₹1.84 lakh crore, reflecting a 9.1% year-on-year growth. In March, GST revenues once again reached ₹1.96 lakh crore, recording a 9.9% annual increase.Â
The SBI report also noted that household savings have increased, as highlighted in the latest RBI annual report. This rise is expected to support domestic investments and provide adequate capital for economic growth without leading to inflationary pressures. Therefore, SBI does not anticipate any major demand-driven inflation in FY26.
The report concluded that, although external and geopolitical risks remain, India is well-equipped to sustain a stable and robust growth path in the year ahead.
