Mumbai, Oct 6 (NationPress) India’s consumption revival is anticipated to gain significant momentum in the latter half of FY2026, bolstered by tax cuts, rate reductions, and GST rationalisation, as per a recent report released on Monday.

The analysis conducted by MP Financial Advisory Services LLP (MPFASL) indicates that these policy initiatives, along with a more favorable monsoon and decreasing inflation, are fostering a conducive environment for household demand and expenditure.

The report highlights that this regulatory trident of supportive measures is likely to enhance disposable incomes, lower borrowing costs, and reduce retail prices, thereby revitalizing India’s consumption engine.

Private final consumption expenditure, which constitutes nearly 61 percent of India's GDP, is projected to experience substantial growth in the second half of the fiscal year.

Mahendra Patil, Founder and Managing Partner at MP Financial Advisory Services LLP, remarked that the overall economic landscape is more favorable than in recent years.

“This year's stronger monsoon is expected to boost agricultural productivity, leading to enhanced rural incomes and improved cash flows. Consequently, this should stimulate a rise in rural consumption and complement the recovery of urban discretionary spending,” he stated.

The report notes that inflation has significantly decreased, providing consumers with increased purchasing power.

According to the findings, the RBI’s decision in October to maintain the repo rate at 5.5 percent reflects confidence in India’s growth trajectory and price stability.

This stable policy stance ensures that the benefits from previous rate cuts and ample liquidity continue to reach households and businesses, further supporting the consumption recovery.

MPFASL anticipates that consumption-driven growth will strengthen further in FY2026, propelling GDP growth towards 7 percent by FY2027, surpassing the RBI’s current forecast of 6.5 percent for this fiscal year.

Increasing consumption is also expected to initiate a virtuous cycle of investment, credit expansion, and job creation.

The report emphasizes that India’s middle class stands to gain the most from the current economic scenario.

With easing inflation and abundant liquidity, households have greater flexibility to spend on items such as consumer durables, electronics, and lifestyle products.

Initial signs of this transition are evident in the rising demand for premium FMCG products and increased sales of appliances like televisions and refrigerators.