Mumbai, Oct 6 : India's consumption revival is expected to gain strong momentum in the second half of FY2026, supported by tax cuts, rate reductions, and GST rationalisation, a new report said on Monday.

The data compiled by MP Financial Advisory Services LLP (MPFASL) said that these policy measures, combined with a better monsoon and easing inflation, are creating a favourable environment for household demand and spending.

The report said that this 'regulatory trident' of supportive measures is likely to boost disposable incomes, reduce borrowing costs, and lower retail prices, helping revive India's consumption engine.

Private final consumption expenditure -- which accounts for nearly 61 per cent of India's GDP -- is projected to rise meaningfully in the latter half of the fiscal year.

Mahendra Patil, Founder and Managing Partner at MP Financial Advisory Services LLP, said the overall economic backdrop is more supportive than in recent years.

'A stronger monsoon this year is expected to boost agricultural output, leading to improved rural incomes and healthier cash flows. This, in turn, should support a pickup in rural consumption and complement the recovery in urban discretionary demand,' he said.

The report pointed out that inflation has eased significantly, giving consumers more spending power.

According to the report, the RBI's decision in October to keep the repo rate unchanged at 5.5 per cent shows confidence in India's growth outlook and price stability.

The stable policy stance ensures that the benefits of earlier rate cuts and surplus liquidity continue to reach households and businesses, reinforcing consumption recovery.

MPFASL expects the consumption-led growth to strengthen further in FY2026, helping GDP growth approach 7 per cent by FY2027, higher than the RBI's current projection of 6.5 per cent for this fiscal year.

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

The report added that India's middle class stands to benefit the most from the current economic setup.

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

Early signs of this shift are visible in rising demand for premium FMCG products and higher sales of appliances like televisions and refrigerators.

/IANS