SBI Report Forecasts Indian Economy to Retain its Position as Fastest-Growing in FY26

Positive Economic Outlook for India in FY26

According to a recent report from the State Bank of India (SBI), India is on track to maintain its position as the fastest-growing major economy in FY26, bolstered by solid macroeconomic fundamentals, a resilient financial sector, and a commitment to sustainable development. Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser at SBI, noted that anticipated increases in national savings, as highlighted in the latest RBI annual report, should provide adequate domestic financial resources to support expected growth. He further emphasized, “We do not foresee demand-driven price pressures in FY26.”

Economic Growth Indicators

India’s economy expanded by 7.4 percent during Q4 FY25, a decline from the 8.4 percent growth seen during the same period the previous fiscal year. The report cited improvement in capital formation as a crucial driver of this growth, which recorded an annual increase of 9.4 percent. This revival was attributed to a rebound in the core sectors during Q4, as evidenced by high-frequency economic indicators. For FY25, the total growth in capital formation amounts to 7.1 percent.

Sectoral Performance and Annual Growth Projections

The strong Q4 results contributed to an estimated annual growth rate of 6.5 percent for FY25. In Q4, almost all sectors demonstrated improved growth figures. The industrial sector recorded a growth of 6.5 percent, while services surged by 7.3 percent. Notably, the construction industry experienced significant growth of 10.8 percent—the highest in six quarters—while manufacturing increased by 4.8 percent. Private consumption remained robust in Q4, despite a slight slowdown in growth compared to previous quarters, achieving a growth rate of 7.2 percent for the entire fiscal year.

Trade Dynamics

On the trade front, export demand has shown resilience throughout the year, increasing by 6.3 percent, whereas imports saw a contraction of 3.7 percent. The SBI report indicates that this growth was primarily driven by an export push in light of uncertainties stemming from US tariffs. Additionally, the sharpest decline in imports occurred in Q4, with a drop of 12.7 percent, which was another contributing factor to the overall GDP growth of 7.2 percent for Q4.