New Delhi, Oct 26 – India’s economy is poised to keep growing in the second half of the current fiscal year (H2 FY26), a recent report from SBI Capital Markets (SBICAPS) says. The forecast hinges on strong domestic demand, even as global markets face uncertainty.
### Domestic consumption drives growth
The report highlights that trade tensions and steep tariffs abroad are a headline concern, but they don’t shake India’s internal engine. With the United States slapping 50 % tariffs on many Indian exports, political leaders are turning their focus inward. Both the central and state governments have already increased capital spending for FY26, and investors expect that to lift investment levels across the country.
India’s tax team has also tweaked the Goods and Services Tax (GST) to match the festive period, a move designed to spark spending. The Confederation of All India Traders (CAIT) projects record‑breaking festive sales of about ₹4.75 trillion this year. Early evidence of this surge comes from the auto retail sector, which saw brisk growth during Navaratri.
### Global trade remains shaky
Globally, SBICAPS labels trade conditions as “uncertain” and calls rising tariffs a “new abnormal.” In the US, Chinese goods fell by 33 % in August 2025 compared to the previous year, yet overall exports gained 4.4 %. The shift suggests supply lines are being rerouted rather than broken. Exporters and retailers have shored up against inflation, but everyday shoppers may start to feel the pinch as costs rise.
A changing world finance picture also figures in the assessment. Central banks are now holding more gold than US Treasuries for the first time in three decades. While nothing has yet replaced the dollar as a global anchor, growing interest in the Chinese yuan and digital currencies suggests a search for new monetary leaders continues. SBICAPS warns that this scramble could inflate asset bubbles.
Artificial intelligence remains a hotbed for investors, drawing massive capital flows even though many AI business models are still untested.
### RBI supports credit flow
On the home front, the Reserve Bank of India (RBI) is easing credit rules to make lending easier. It has lifted limits for large borrowers, eased conditions for acquisition finance, and raised loan caps against shares, real‑estate investment trusts (REITs), and infrastructure bonds (InvITs). These moves have helped the bank’s credit‑deposit ratio climb over 80 % for the first time this fiscal year.
Overall, Indian economic experts see solid domestic consumption and supportive policy as the main forces keeping growth steady, even as global trade hurdles climb.
Source: ianslive
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