Daijiworld Media Network - New Delhi

New Delhi, May 31: India is expected to retain its title as the world’s fastest-growing major economy in FY26, supported by strong macroeconomic fundamentals, a resilient financial sector, and a focus on sustainable development, according to a State Bank of India (SBI) report.

Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser at SBI, noted that with higher savings projected by the RBI, domestic resources will be sufficient to fuel growth without creating significant price pressures in FY26. However, he cautioned that external and geopolitical factors could pose risks.

India’s GDP grew by 7.4% in Q4 FY25, driven by a sharp increase in capital formation, which jumped 9.4% year-on-year thanks to a revival in the core sector. For the full year FY25, capital formation grew by 7.1%.

The overall economy expanded by 7.4% in Q4, compared to 8.4% in the same quarter last year, resulting in annual growth of 6.5% for FY25. Almost all sectors contributed to the recovery. Industry grew by 6.5% and services by 7.3% in Q4. The construction sector, in particular, soared with a 10.8% increase—the highest in six quarters—while manufacturing rose by 4.8%.

Private consumption stayed robust, posting a 7.2% growth in FY25 despite a slight sequential slowdown in Q4. Exports grew by 6.3% over the year, while imports contracted by 3.7%, helping maintain a healthy trade balance.

SBI’s report attributes the strong export performance to a front-loaded push amid US tariff uncertainties. A steep 12.7% contraction in imports in Q4 also contributed to Q4 GDP growth.