India’s Growth Engine To Shift Gears: Investment Set To Outpace Consumption In FY26, Says SBI Mutual Fund Report

In a promising outlook for India’s economic trajectory, a recent report by SBI Mutual Fund has forecast that "between consumption and investment, investment could be a likely out-performer in FY26.”

According to ANI, the report predicts that investment-led growth will play a dominant role in financial year 2025–26, even as policy tailwinds steer the economy through a gradual upturn.

India’s Gross Domestic Product (GDP) rose by 6.2 per cent in the third quarter (Q3) of FY25, up from the revised 5.6 per cent in Q2, signalling a recovery.

SBI Mutual Fund estimates GDP growth for FY26 to be in the range of 6.5–7 per cent, marginally higher than the expected 6.5 per cent in FY25. While this is below the 7.5–9 per cent range seen during FY22–FY24, the report maintains this level of expansion as “healthy.”

Supporting this optimistic outlook, rural consumption is likely to improve, alongside increased government spending and a shift in macroeconomic policy stance.

The report noted that in the last two years, focus of the government's fiscal policy was consolidation, while the RBI had prioritized controlling inflation and ensuring financial stability. Now, both institutions appear more growth-oriented.

The RBI has begun easing monetary conditions through rate cuts, liquidity support, and regulatory relaxation. On the fiscal side, although consolidation efforts remain, government spending targets are expected to be met more effectively than in FY25.

Corporate order books remain robust, suggesting sustained private investment, even as government capex growth stays moderate. Nominal GDP is projected to rise slightly to 10–11 per cent in FY26, compared to 9–10 per cent in FY25.