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According to a State Bank of India (SBI) research, the Indian economy is expected to maintain its position as the major country with the highest rate of growth in FY26 by using its strong financial sector, excellent macroeconomic foundations, and dedication to sustainable development.

The domestic finances would be enough to support the projected growth with greater expected savings based on the most recent RBI annual report, and “we do not expect demand-induced pressure on prices in FY26,” said Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.

According to Ghosh, external and geopolitical forces are the source of growth’s drawbacks.

On the spending side, a robust increase in capital formation, which saw an annual gain of 9.4%, helped sustain the GDP’s 7.4% growth in Q4.

High frequency indicators showed that the core sector’s improvement in Q4 was the reason for the capital creation rebound. As of right now, FY25’s total capital formation increase is 7.1%.

India’s GDP expanded by 7.4% in Q4 of FY25 compared to 8.4% in the same quarter of the previous fiscal year. Based on Q4 data, an annual growth rate of 6.5% is projected for FY25.

In Q4 of FY25, almost every industry showed improved growth figures. In Q4, the services sector increased by 7.3%, while industrial rose by 6.5%. In Q4, the manufacturing sector rose by 4.8% and the construction sector by a staggering 10.8%, both of which were six-quarter highs.

Despite a sequentially sluggish pace of increase in Q4, private consumption continued its healthy run. All things considered, private consumption increased by 7.2% in FY25.

Throughout the whole year, the demand for exports grew by 6.3%, indicating a robust market, while imports decreased by 3.7%.

The SBI research claims that this rise was front-loaded due to an export drive amid uncertainties around US tariffs. Another element contributing to the total GDP growth of 7.2% in Q4 was the largest reduction in imports, which occurred in Q4 at 12.7%.