SBI Revises India’s GDP Growth Forecast to 6.3% for FY25 Amid Economic Challenges
Mumbai, Maharashtra [India], January 8: The State Bank of India (SBI) has adjusted its GDP growth forecast for India in the fiscal year 2024-25 (FY25) to 6.3%, marginally lower than the National Statistical Office’s (NSO) estimate of 6.4%. This revision, as per SBI, reflects a “downward bias” influenced by several economic challenges.
The bank’s report noted, “GDP growth for FY25 could be around 6.3 per cent, with downward bias,” underscoring the headwinds faced by the economy. Key factors such as a slowdown in manufacturing and credit growth, coupled with the lingering effects of a high base, have tempered growth expectations for the fiscal year.
According to the First Advance Estimates (FAE) for GDP, a broader deceleration in aggregate demand is evident, reflecting the pressures weighing on economic activity.
Sector-Wise Contributions to GDP
SBI’s analysis highlighted sectoral contributions to GDP growth. Government consumption is expected to grow at a nominal rate of 8.5% and a real rate of 4.1%, offering some cushion to the economy amid otherwise subdued trends.
However, the industrial sector paints a less optimistic picture. All sub-segments of the industry are anticipated to decelerate in FY25, with the sector’s growth projected at 6.2%, a sharp drop from the 9.5% recorded in FY24. The report specifically pointed out that both manufacturing and mining are expected to slow down significantly compared to the previous fiscal year.
Despite the overall slowdown in industrial growth, the agriculture sector offers a glimmer of hope. Agricultural output is forecast to grow by 3.8% in FY25, marking a significant recovery from the modest growth of 1.4% in FY24. This uptick is expected to contribute positively to the overall economic outlook.
Per Capita and Nominal GDP Trends
The report also noted a rise in per capita nominal GDP, with the NSO projecting an increase of approximately ₹35,000 compared to FY23 levels. However, nominal GDP growth is expected to remain nearly stagnant, with an estimated growth of 9.7% in FY25, only slightly higher than the 9.6% growth recorded in FY24.
Challenges and the Road Ahead
SBI’s revised GDP growth forecast reflects the complexities India faces in maintaining robust economic momentum amidst global uncertainties and domestic pressures. The report highlighted the need for targeted interventions to boost manufacturing and credit growth, which are critical for sustainable economic performance.
The First Advance Estimates, offering an early insight into GDP trends, suggest that FY25 will likely be a year of moderated growth. Policymakers are expected to strike a balance between fostering growth in key sectors and mitigating headwinds to sustain economic momentum.
As the year unfolds, maintaining economic stability will require a strategic approach to address sector-specific challenges while leveraging areas of strength, such as agriculture and government expenditure, to drive growth forward.
