SBI report warns of global headwinds, pegs India’s FY26 GDP growth at 6.3%

The economy recorded a lower growth rate of 6.5 per cent in 2024-25 (April 2024–March 2025), down from 9.2 per cent in the preceding year

India’s economy is projected to expand at 6.3 per cent in the current fiscal, slightly below the Reserve Bank of India’s (RBI) forecast of 6.5 per cent, according to a report released by SBI Research on Thursday.

The report estimates first-quarter GDP growth at about 6.8–7 per cent, attributing the momentum to subdued private capital expenditure.

For 2025-26, India’s GDP is expected to grow between 6.3 and 6.8 per cent, supported by strong macroeconomic fundamentals. However, the Economic Survey cautioned that careful and strategic policy measures would be needed to withstand global challenges.

The economy recorded a lower growth rate of 6.5 per cent in 2024-25 (April 2024–March 2025), down from 9.2 per cent in the preceding year.

On quarterly projections, SBI Research pegged growth at 6.5 per cent in Q2, 6.3 per cent in Q3, and 6.1 per cent in Q4 of FY26 — the lowest for the year. By comparison, the RBI has projected real GDP growth at 6.5 per cent in Q1, 6.7 per cent in Q2, 6.6 per cent in Q3, and 6.3 per cent in Q4.

Highlighting challenges, the report pointed out that muted private capex remains a key concern for sustaining growth. A survey of 2,170 enterprises across agriculture, manufacturing, IT, and other sectors in April 2025 revealed that planned capital expenditure for FY26 is significantly below FY25 levels. The report also noted that the numbers could fall further, as US tariffs are likely to weigh on investment plans.

The analysis further showed that government capital expenditure has a persistent and structural impact, generating an immediate positive push, followed by short-term fluctuations, before stabilizing at a sustained level. This, it said, underscores the role of public capex as a durable driver of fiscal policy rather than a temporary or noise-led factor.

On the credit side, bank loan growth slowed to 10 per cent as of July 25, 2025, compared to 13.7 per cent a year earlier. Meanwhile, aggregate deposits grew 10.2 per cent year-on-year, slightly lower than the 10.65 per cent recorded last year.

Sector-wise credit data for June 2025 indicated a broad slowdown across industries, except in the SME segment, where lending rose 21.8 per cent year-on-year, sharply higher than 14.2 per cent in the previous year.

The report also warned that US tariffs could exert revenue and margin pressures in export-oriented sectors such as textiles, gems and jewellery, leather, chemicals, agriculture, and auto components during Q2.

(With PTI inputs)