When we think about India growth story, it often feels unstoppable rising consumption, strong domestic demand, and global recognition as one of the fastest growing economies. But beneath the optimism lies a critical challenge that could slow down the country’s journey toward sustainable development. According to SBI Research’s latest report, the biggest concern right now is the muted private investment or capital expenditure (capex), which must rise if India wants to secure a robust and balanced growth path.
Private Capex Must Complement Public Spending
SBI Research points out that while the government’s capex has been pushing India Growth, it cannot carry the baton alone. The report highlighted that the peak elasticity of government capex to GDP stood at 1.17, which means private investors must step up and complement the public push. Without stronger participation from private players, India risks missing the momentum required for sustainable, high quality growth. The report goes a step further, calling for private investors to become “Apostles of Growth 2.0,” urging them to stay globally competitive while also focusing locally. In simpler words, India’s private sector has to take the lead in driving innovation, productivity, and expansion alongside government initiatives.
India’s Growth Expectations for FY26
Despite concerns around private investment, SBI Research still projects India’s Q1 FY26 GDP growth between 6.8% and 7.0%. However, the agency did caution that leading indicators of consumption and demand showed some moderation compared to earlier quarters. Using its Composite Leading Indicator (CLI), SBI observed a slight dip in economic activity during April June 2025, though overall momentum remains stable.
Inflation Outlook and RBI’s Policy Moves
On inflation, SBI Research aligned closely with the Reserve Bank of India (RBI), noting that a sharp fall in vegetable prices has allowed the central bank to cut its inflation forecast for FY26 to 3.1%, down from the earlier 3.7%. However, the report cautioned that food prices remain vulnerable to excessive or unseasonal rains, which have recently caused fresh spikes in vegetable costs. Still, with a plentiful monsoon forecast aiding crop sowing, food inflation is expected to remain under control. On monetary policy, the agency anticipates that the RBI could consider a 25 basis point rate cut, depending on future data trends. Any further policy easing, it said, would be highly data driven.
Domestic Demand Still Strong Amid Global Uncertainty
Even as global challenges from trade uncertainties to geopolitical tensions continue to weigh on economies worldwide, India’s domestic demand remains a pillar of strength. SBI expects real GDP growth of 6.2% and nominal GDP growth of 9% in FY26, supported by resilient household spending and government policies. But to keep this growth sustainable, the missing piece is clear: private investors must reignite their confidence and invest boldly in India’s future.
Conclusion
India Growth story is far from dim, but the SBI Research report makes one thing crystal clear: without strong private sector participation, the government’s efforts alone won’t be enough to maintain momentum. As the country looks ahead to FY26 and beyond, the call for private investment is louder than ever.
Disclaimer: This article is based on insights from SBI Research’s report and public economic data. It is intended for informational purposes only and should not be considered financial advice.
