Increased capex, focus on rare earth minerals may shape India's 'Viksit Bharat' journey: EY report

An increased capital expenditure and focus on rare earth minerals may shape India's Viksit Bharat journey, according to a report by EY. It suggested that policy measures must balance consumption support with increased capital expenditure.
Also, India's long-term growth relies on building resilience through self-reliance in critical minerals. Critical minerals are those minerals that are essential for economic development and national security.

In June 2023, India has identified at least 30 critical minerals taking into account its requirements for sectors like defence, agriculture, energy, pharmaceutical, and telecom.


India has launched a National Critical Mineral Mission in 2025 to address this, but further support from both the public and private sectors will be important, EY said. Strengthening partnerships with countries rich in rare earth resources could also help reduce supply chain risks.

According to the EY Economy Watch May edition, India's economic growth for 2025-26 is expected to moderate, influenced by a mix of global and domestic developments.

Yet, the EY report said India remains one of the fastest-growing major economies, supported by resilient domestic demand, easing inflation, and an accommodative monetary policy linked to prospects of revival in private investment.

As per EY report analysis, global factors are largely contributing to a cautious outlook. These include continuing supply chain disruptions, the impact of recent tariff measures by the US, and broader uncertainties in global trade and geopolitical developments.

EY report suggests that in the near term, India may need to rely on a balanced mix of monetary and fiscal policies for sustaining the growth momentum. On the monetary front, a continuation of the ongoing rate cut cycle could provide support to consumption and investment.

On the fiscal side, reviving the momentum in public investment especially the government's capital expenditure, which witnessed a moderation in growth in 2024-25, will be important to sustain economic activity.

DK Srivastava, Chief Policy Advisor, EY India said, "While India's medium-term prospects remain strong, current global headwinds and domestic challenges call for supportive fiscal and monetary policies. Over the long run, sectors linked to technology and clean energy will play a key role in driving sustainable growth. Building resilience through self-reliance in critical minerals, especially in rare earths, can help India move closer to its Viksit Bharat aspirations."