Elara Securities’ Garima Kapoor: India’s 6.5% Growth Rate Won’t Propel Us to ‘Viksit Bharat’
India’s economic landscape currently reflects a growth trajectory deemed durable yet precariously comfortable, according to Garima Kapoor, Deputy Head of Research and Economist at Elara Securities. Kapoor articulates that the present real GDP growth rate of 6.5% is insufficient to realize the ambitious Viksit Bharat vision by 2047. To meet these aspirations, a minimum sustained growth rate of 7.5% to 8% in real terms is necessary. Her analysis stems from a panel discussion at the recent ET Alpha Wealth Summit 2026, attended by notable economic experts who echoed similar sentiments regarding the country’s growth prospects.
Kapoor further breaks down the economic drivers, identifying government spending, consumer demand, and corporate investment as the primary components, all currently underperforming. While the government consolidates its fiscal position, and consumer demand is mainly driven by policy rather than organic growth, corporate entities, despite being well-capitalized, are notably reluctant to invest in capacity expansion. This reluctance raises concerns about the future sustainability of consumption, emphasizing the need for a robust private capital expenditure cycle to generate new income avenues.
Despite these challenges, Kapoor identifies two potential tailwinds that could elevate India’s growth rating from a 6 out of 10 to 7.5 within five years. The first is the global reindustrialization trend, which is prompting countries to localize supply chains, positioning India favorably to capture this shift. The second is the signing of over eight free trade agreements in the past year, marking a significant shift toward export openness. These strategic moves may act as catalysts for growth, provided they are executed effectively.
However, Kapoor offers a sobering perspective on foreign portfolio investor (FPI) interest, attributing recent outflows to a lack of earnings growth that justifies India’s premium valuation. With nominal GDP growth forecasted at around 8% for FY25 and FY26, corporate earnings are projected to struggle to reach 10%. Until nominal GDP recovery translates into a solid rebound in earnings, India is likely to remain an investment option for those seeking exceptional returns rather than a central holding in diversified portfolios. Ultimately, Kapoor succinctly concludes that the strength of India’s growth narrative hinges on effective execution of its economic strategies.
Source: The Economic Times
(Expert Note: This report was prepared by the Wealthova team.)