Capex, Credit & Caution: Sbi Mf’s Chief Economist Namrata Mittal On What Lies Ahead For Indian Economy

India’s system is astatine an important shape arsenic world challenges for illustration waste and acquisition tensions, rising uncertainty, and slowing maturation proceed to unfold. In an relationship pinch BT, Namrata Mittal, Chief Economist astatine SBI Mutual Fund, explains what to expect successful nan coming year. She shares her views connected India’s maturation prospects, ostentation trends, capex momentum, and cardinal macro risks investors should watch successful FY26. Edited excerpts:

Q. How do you spot India’s economical maturation shaping up complete nan adjacent 12 to 18 months, fixed nan world backdrop and home factors?

Mittal: India stands astatine a unsocial constituent globally. The US-China waste and acquisition frictions are acold from over, and India, arsenic a neutral player, is poised to use from nan ongoing displacement successful world waste and acquisition patterns—especially pinch nan “China + 1” strategy gaining traction.

Domestically, liquidity conditions person improved, though backing costs haven’t fallen meaningfully yet. Market borrowing channels are much responsive than slope loans. Stable slope profitability could boost in installments off-take done FY26.

Excise work hike earlier this fiscal and Rs 400 cardinal of other RBI profit transportation yields a bully starting constituent to nan cardinal authorities to grip imaginable taxation shocks, higher defence spending, aliases unforeseen expenditures successful FY26.

In FY26, India’s existent maturation is apt to enactment astir 6.5%. While nan patient agriculture prospects, nan government’s desire to guarantee amended realisation of capex targets and easing monetary conditions should thief support demand, we are worried astir deficiency of robustness successful family income, moderating backstage assemblage capex and existent property activities. While nan tariff troubles person been averted for now, world argumentation uncertainty is simply a consequence to India’s maturation too. More than existent growth, we are worried astir nominal maturation which could dip beneath 9% owing to consequence of export deflation.

Q. What’s your ostentation and liking complaint outlook for FY26?

Mittal: Inflation is expected to enactment beneath 4% for astir of FY26, assuming favourable monsoons and softening world prices. Domestic request remains weak, and fiscal consolidation continues, each of which support a contained ostentation outlook.

Although we initially expected a shallow 50 bps rate-cut cycle, further cuts can’t beryllium ruled out. There’s increasing unit from anemic world growth, soft crude, and perchance deflationary exports from China. Still, we judge liquidity support matters much than complaint cuts. RBI has rightly kept liquidity benign, which should constrictive nan credit-deposit gap. Regulatory easing could amended in installments maturation by 2–3 percent points by nan 2nd half of 2025.

Q. How will world economical slowdown and geopolitical tensions impact India?

Mittal: So far, world developments—especially since Donald Trump’s 2nd term—haven’t wounded India much. Crude prices are favourable, and FII flows person resumed. But India isn’t immune. If world maturation falters, India will consciousness nan impact.

That said, post-Covid, India has avoided awesome argumentation missteps. Going forward, sound home argumentation will beryllium cardinal to weathering world shocks.

Q. What macro trends should equity and indebtedness investors watch correct now?

Mittal: Investors should support a adjacent oculus connected nan US output curve, dollar movement, and Brent crude prices. We are intimately watching if nan era of US exceptionalism is ending—it would person far-reaching implications for Indian markets.

Markets often astonishment from directions fewer anticipate. While we tin analyse nan known risks, nan “unknown unknowns” are ever nan hardest to hole for.

Q. Do you spot a meaningful pickup successful backstage assemblage finance (capex) successful India?

Mittal: Private assemblage capex is not wholly weak, but it isn’t peculiarly buoyant either. It remains broad-based and appears to beryllium much strategical and deliberate. We are operating successful a highly move world and home environment, marked by accrued uncertainty and nan imaginable for achromatic swan events. With nan lingering representation of nan IBC era and caller firm deleveraging cycles, backstage investments are now mostly concentrated successful sectors wherever capacity utilisation is intelligibly justified.

In our study of astir 10,000 listed and unlisted companies, firm capex (across some nationalist and backstage sectors) has grown astatine a compound yearly maturation complaint (CAGR) of 15% complete nan past 4 years (FY22–FY25). However, pinch nan government's capex momentum opening to mean and patient capacity additions already seen crossed respective sectors, wide firm capex is expected to decelerate to mid-single-digit maturation successful FY26 and FY27. Some capex-heavy sectors—such arsenic metals, cement, lipid & gas, sugar, chemicals, and superior goods—are now plateauing aft a patient description rhythm post-COVID.

Q. Which sectors aliases themes are champion positioned to use from structural shifts successful India’s economy?

Mittal: Energy stands out, particularly pinch nan authorities focusing connected expanding generation, transmission, and storage. The financialisation of savings is different semipermanent taxable pinch room to grow.

Q. How do you measure nan government’s fiscal stance and capex strategy?

Mittal: The authorities is committed to fiscal consolidation. From a mixed fiscal shortage of 13.1% of GDP successful FY21, we’re now conscionable nether 8% successful FY25. The extremity is to bring it person to 7%, which standing agencies way closely.

The debt-to-GDP ratio is now nan main fiscal anchor, pinch a target of 51% by FY31. This requires holding nan fiscal shortage adjacent 4% from FY27 onward. Despite taxation cuts, nan Centre continues to prioritise infrastructure. At nan authorities level, however, rising populist spending is hurting capex. The bigger situation for nan Centre is execution, not funding.

Q. What cardinal reforms aliases argumentation shifts are needed to prolong India’s semipermanent growth?

Mittal: Beyond infrastructure and logistics, we request a stronger attraction connected acquisition and skills. Improved quality superior will let greater labour absorption and faster tech adoption—both of which thrust productivity and sustainable growth.

Q. What indicators do you way astir intimately to measure India’s system and marketplace sentiment?

Mittal: We show respective high-frequency indicators for illustration GST collections, slope in installments growth, power usage (power + petroleum), and logistics information (road, rail, air, ports). From there, we spell deeper into sector-specific information connected demand, inflation, exports, costs trends, and much to get a afloat image of nan economical health.