India's macroeconomic variables to remain stable in FY26, consumption growth to pick up: ITC

Time of India

10 hours ago

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India's macroeconomic variables are expected to remain stable in FY26, with GDP growth staying around 6.5 per cent, said multi-conglomerate ITC in its latest annual report.Besides, ITC also expects an uptick in the consumption growth helped by continued rural recovery along with improvement in urban demand which was subdued due to high inflation."Consumption expenditure is expected to pick up progressively led by continued recovery in rural demand backed by a good monsoon, along with improvement in urban demand as inflation stabilises and tax cuts announced in the Union Budget boost disposable incomes," said ITC.Besides, the cumulative impact of pick up in capex in the second half of FY25 and increase in capex outlay by the government announced in the budget, along with interest rate cuts and liquid support from RBI, would also be supportive of growth, it said."The Indian economy is poised to grow rapidly in the years ahead driven by structural factors such as a favourable demographic profile, increasing affluence, rapid urbanisation, accelerated digital adoption and the entrepreneurial spirit of its people," it said.Government thrust on strengthening country's physical and digital public infrastructure, focus on enhancing the competitiveness of the manufacturing sector, indirect/direct taxation and financial sector reforms, along with measures to promote ease of doing business, are expected to power the economy going forward."India continues to remain the fastest growing large economy in the world - a relatively bright spot amidst the challenging global operating environment," said ITC.However, the pace of growth, moderated from 9.2 per cent in FY24 to 6.5 per cent in FY25.It also raised concerns over food inflation, which witnessed a 'sharp uptick' and impacted the consumption growth in the FMCG sector, which is the second largest business of ITC after cigarettes."The impact of inflationary pressures on household savings weighed on consumption expenditure, particularly in urban markets; however, demand in rural markets was relatively resilient. The weakness in consumption was reflected, inter alia, in the muted volume growth of the FMCG sector," it saidFood inflation was 7.3 per cent in FY25, while headline inflation (CPI) remained within the RBI's target range at 4.6 per cent.ITC also said structural support would need to be provided to sectors with potential for large economic-multiplier impact.In this regard, the development of robust domestic agri and wood-based value chains hold special importance in the Indian context, given their enormous potential to contribute to national objectives.According to ITC, enhancing agricultural productivity and value addition to international standards, improving market linkages are important to enhance competitiveness of the agri sector and drive significant increase in farmers' income.India is amongst the leading producers in the world of several agri-commodities, including milk, rice, wheat, sugarcane, cotton, pulses, spices and fruits & vegetables, however, its share of global agri-trade remains low at only about 3 per cent.