SBI Projects India's FY26 GDP Growth at 6.3%, Below RBI Estimates

SBI Research has projected India’s GDP growth at 6.3% for FY26, lower than the Reserve Bank of India’s estimate of 6.5%. The first quarter growth is expected at 6.8-7%, while subsequent quarters may see moderation, with growth slowing to 6.1% in the final quarter. Overall, the economy is expected to expand between 6.3-6.8% in 2025-26, supported by strong macroeconomic fundamentals but also requiring careful policy management to handle global uncertainties.

Capex and Policy Concerns

The report emphasises that muted private investment remains a key risk to sustained growth. It cited a survey of 2,170 firms across agriculture, manufacturing, and IT, which revealed lower intended capital expenditure for FY26 compared to FY25. 

As per news reports, it warned that “numbers may further decline as US tariffs may significantly impact the capex.” In contrast, public capital expenditure is described as a “persistent driver reinforcing its role as a structurally sustainable element in the expenditure composition.”

Credit and Sectoral Trends

Bank credit growth slowed to 10% as of July 2025, compared to 13.7% last year, while deposit growth remained broadly stable at 10.2%. Sectoral lending also declined across most areas, except SMEs, which recorded robust growth of 21.8% year-on-year versus 14.2% a year ago. 

The report also noted that with the imposition of tariffs by the US, “we may see an effect in revenue and margin pressure in export-oriented tariff-affected sectors, such as Textile, Gems and Jewellery, leather, Chemicals, Agriculture, Auto Components, etc, in Q2.”

Read More: India's GDP Growth Could Slow to 6% in FY26 if 50% Tariffs are Imposed: Moody's!

Conclusion 

India’s economy is set to grow between 6.3–6.8% in FY26, supported by public spending but facing hurdles from muted private investment and global headwinds. Strong SME credit growth offers resilience, yet US tariffs may pressure export-driven industries.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.