FY26 poised for decent growth amid falling inflation and monetary policy shift: Report

New Delhi [India], June 27 (ANI): A significant drop in inflation, a healthy crop outlook, a normal monsoon, and changes in monetary policy have created a positive outlook for FY26 across sectors such as automobiles, consumer durables, FMCG, and building materials, noted a report by Centrum.

The Indian automobile industry is set for moderate yet broad-based growth in FY26, underpinned by supportive macros, policy reforms, and a healthy product pipeline. The Passenger Vehicle (PV) segment is expected to grow at 2-4 per cent, buoyed by continued SUV demand and improved affordability. The Commercial Vehicle sector is also likely to expand by 5-6 per cent.

Additionally, Household consumption is also likely to continue its uptrend in FY26, mainly due to the positive rural economy supported by cooling commodity prices.

"Going forward, the income tax cuts, forecasts of a normal monsoon, cut in interest rates and healthy capex by income tax cuts, forecasts of a normal monsoon, cut in interest rates and healthy capex by the government is likely to lift the consumer sentiments and will likely lead to improve the overall consumption story of India," Centrum said in the report.

The forecast for the agriculture sector so far in FY26 is favourable will add impetus to the rural economy. The rabi harvest in March-April 2025 was strong, notably for wheat and other staples, which improved farm incomes in many regions. This has already translated into higher spending on farm equipment and inputs.

Furthermore, the southwest monsoon in 2026 is predicted to be above normal. The government has also announced a 3 per cent increase in MSP (Maximum Selling Price) for Kharif crops in June, ensuring price support for crops like rice, maize, and pulses.

On the banking side, credit expansion has shown signs that loan growth is stabilising and could rebound in FY26, following a marked slowdown in credit expansion through FY25.

The positive outlook can be attributed to interest rates coming down and economic activity picking up, credit demand from banks and non-banking financial companies (NBFCs) is likely to strengthen.

However, going forward the report cautions to watch for monsoon progression and fuel prices "Key monitorables include monsoon progression, fuel prices, and credit availability, which will shape demand resilience through FY26". (ANI)