Fixed investments continue to be key driver of GDP growth this fiscal: Crisil
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India’s economic growth in FY25-26 is expected to be increasingly supported by a revival in fixed investments, even as private consumption growth moderates slightly, according to a report by Crisil .
Gross fixed capital formation (GFCF), which has been the backbone of post-pandemic growth, is projected to rise by 7.8% in FY26, up from 7.1% in FY25, Crisil said. The GFCF-to-nominal GDP ratio is expected to remain broadly stable at 30%, compared with 29.9% a year earlier, indicating sustained investment intensity in the economy.
Government spending is also set to provide a significant boost to demand. Government final consumption expenditure growth is estimated to accelerate sharply to 5.2% in FY26 from 2.3% in the previous fiscal, aided partly by a favourable base effect.
Private final consumption expenditure remains resilient
Private final consumption expenditure (PFCE) while easing marginally, remains resilient. The NSO estimates PFCE growth at 7% in FY26, slightly lower than 7.2% in FY25 but still above the decadal average of 6.1%, supported by tax relief measures, Reserve Bank of India (RBI) rate cuts, direct benefit transfers exceeding ₹4 lakh crore, and low inflation.
January 2026
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Exports are projected to grow 6.4% in FY26, marginally higher than 6.3% in FY25. Merchandise exports were frontloaded in the first half of the fiscal in anticipation of tariffs, while robust services exports helped cushion overall export performance.
The NSO, however, expects GDP growth to moderate in the second half of FY26 to 6.8%, compared with 8% in the first half. The composition of growth is also set to shift. PFCE growth is likely to soften to 6.6% in the second half from 7.5% in the first, while GFCF (8.1% vs 7.6%), GFCE (8% vs 2.4%), and exports (6.8% vs 6%) are expected to strengthen.
Services sector is projected to lead growth
On the supply side, the services sector is projected to lead growth, with gross value added (GVA) rising 9.1% in FY26, up from 7.2% last year. Financial, real estate and professional services, along with public administration and trade, hotels, transport and communication services, are expected to see broad-based acceleration.
Industrial GVA growth is estimated at 6.2%, marginally higher than 5.9% in FY25, driven by a sharp pickup in manufacturing growth to 7% from 4.5%. However, electricity and mining output are expected to soften, partly due to the early onset of the monsoon. Construction growth, while moderating, is projected to remain healthy at 7%.
Agriculture and allied sector GVA growth is expected to slow
Agriculture and allied sector GVA growth is expected to slow to 3.1% from 4.6%, impacted by uneven monsoon rains and a sharp fall in agricultural inflation. Overall, the NSO projects India’s real GDP growth at 7.4% in FY26, up from 6.5% in FY25, with fixed investments and services-led expansion continuing to anchor the growth outlook.