Capex, credit & caution: SBI MF’s Chief Economist Namrata Mittal on what lies ahead for Indian economy

India’s economy is at an important stage with continued global challenges such as trade tensions, high uncertainty, and slow growth. In interaction with BT, Namrata Mittal, SPI MUTUAL FUND, explains what can be expected next year. It shares its views on the prospects for growth in India, inflation trends, CAPEX momentum, and the main total risks that investors should see in the 26th fiscal year. Excerpts edited:

Q: How do you see economic growth in India formed over the next 12 to 18 months, given the global background and local factors?

Metal: India stands at a unique point worldwide. The US-Chinese trade frictions do not end, and India, as a neutral player, is preparing to take advantage of the continuous shift in global trade patterns-especially with the “China + 1” strategy that gains traction.

At the local level, liquidity conditions improved, although the financing costs have not yet decreased. Market borrowing channels are more responsive to bank loans. The profitability of the bank can be promoted credit through the 26th fiscal year.

The height of the duty in the duty earlier in this finance and 400 billion rupees from the additional transfer of RBI profit leads to a good starting point for the central government to deal with potential tax shocks, higher defensive spending or unexpected expenses in the 26th fiscal year.

In the 26th fiscal year, the real growth of India is likely to remain about 6.5 %. Although the prospects for healthy agriculture, the government’s desire to ensure a better achievement of CEPEX goals and reduce cash conditions should help in supporting demand, we are concerned about the lack of durability in family income, and putting Capex private sector and real estate activities. While the problems of customs tariffs have been avoided at the present time, the uncertainty in global politics is a risk to India’s growth as well. More than real growth, we are concerned about the nominal growth that can decrease to less than 9 % due to the risk of export contraction.

Q: What are your inflation expectations and your interest rate for the 26th year?

Metal: It is expected that inflation will remain less than 4 % for most fiscal year 26, assuming favorable monsoons and softening international prices. Local demand is still weak, financial monotheism continues, all of which supports inflation expectations.

Although we initially expected a 50 -bit shallow cycle per second, additional discounts cannot be excluded. There is an increasing pressure from weak global growth, soft crude, and possibly shrinkage exports from China. However, we believe that liquidity support is offered more than price discounts. RBI maintained the right of benign liquidity, which should narrow the credit credit gap. Organizational mitigation can improve credit growth by 2-3 percentage points by the second half of 2025.

Q: How will the global economic slowdown and geopolitical tensions affect India?

Mittal: Until now, global developments – especially the state of Donald Trump – have not been hurt a lot. Co -crude prices, resuming FII flows. But India is not immune. If global growth stumbles, India will feel the effect.

However, post -pond India avoided, that India avoided major policy errors. To move forward, sound domestic policy will be a key to global trauma.

Q: What are the total trends that stock and debt investors should see now?

Metal: Investors must monitor the American return curve, the dollar movement, and the Brent raw prices. We are closely watching whether the exceptional era of us ends-it will have far-reaching traces on Indian markets.

The markets are often surprised by a little directions. Although we can analyze the known risks, the “unknown unknown” is always the most difficult to prepare.

Q: Do you see Beck App with a meaning in private sector investment (CAPEX) in India?

MITTAL: CAPEX private sector is not completely weak, but it is not especially crowded. The base remains the base and it appears to be more strategic and intentional. We are working in a very dynamic global and local environment, characterized by increased uncertainty and the possibility of black swan. Through the ongoing memory of the IBC and the last companies’ reduction courses, private investments are now largely focused in sectors that justify the use of capabilities clearly.

In our analysis of about 10,000 listed and non -listed companies, CAPEX (in all public and private sectors) has grown with a 15 % annual CAGR growth rate over the past four years (FY22 – Fight25). However, with the start of the government’s CAPEX momentum in moderate and healthy additions that have already seen in many sectors, the CAPEX total growth is expected to grow in the middle of the number in the 26th and FY27 fiscal year. Some heavy sectors in Capex- such as minerals, cement, oil and gas, sugar, chemicals, and capital goods-are now the plateau after a healthy stretch cycle after the ruling.

Q: What are the sectors or topics that are better placed to take advantage of structural transformations in the economy of India?

Metal: Energy is highlighted, especially with a focus on the government on expanding the scope of generation, transportation and storage. The financial fixation of savings is another long -term theme with a space for growth.

Q: How do you evaluate the government’s financial strategy and the CAPEX strategy?

Metal: The government is committed to financial unification. From a shared financial deficit of 13.1 % of GDP in fiscal year 21, we are now less than 8 % in the 25th fiscal year. The goal is to make it closer to 7 %, which follows the classification agencies closely.

The debt ratio to GDP is now the main financial subject, with a 51 % target by FY31. This requires a financial deficit contract near 4 % of the fiscal year 27 onwards. Despite the tax cuts, the center continues to give priority to the infrastructure. At the state level, however, increased popular spending harms Capex. The largest challenge of the center is implementation, not financing.

Q: What are the main reforms or political transformations necessary to maintain the growth of India in the long run?

Metal: Beyond the infrastructure and logistics, we need a stronger focus on education and skills. Improved human capital will allow more employment absorption and faster technology accreditation – whichever leads productivity and sustainable growth.

Q: What are the indicators that follow closely to evaluate the economy in India and market morale?

Mittal: We monitor many high -frequency indicators such as GST groups, bank credit growth, power + Petroleum, and logistics data (road, railways, air, ports). From there, we delve deeper data in the sector for demand, inflation, exports, wage trends, and more to obtain a complete picture of economic health.