SBI Lowers India's GDP Forecast Amid Economic Challenges

The State Bank of India has lowered its GDP growth forecast for FY25 to 6.3%, citing challenges like manufacturing slowdown and high base effect. While government consumption and agricultural growth offer some optimism, concerns persist over deceleration in industrial sectors and nominal GDP stagnation, urging targeted policy interventions.

The State Bank of India (SBI) has adjusted its GDP growth forecast for India in FY25 to 6.3%, marking a slight reduction from the National Statistical Office's 6.4% estimate. The bank attributes this downward revision to multiple challenges impeding economic development.

SBI's report outlines concerns about a manufacturing slowdown, lagging credit growth, and the repercussions of a high base effect. Additionally, the First Advance Estimates (FAE) indicate a slowdown in aggregate demand across the fiscal year. Certain sectors, however, are expected to bolster GDP growth, with government consumption predicted to rise by 8.5% nominally and 4.1% in real terms.

Despite some positive trends, the report flags a slowdown in all industrial subcategories, projecting a 6.2% growth rate, a significant drop from FY24's 9.5%. In contrast, the agriculture sector is forecasted to rise to 3.8% growth in FY25. Moreover, an increase in per capita nominal GDP is noted, yet overall nominal GDP growth remains nearly flat. The SBI analysis calls for strategic interventions to enhance manufacturing and credit growth to improve economic performance amid global and domestic challenges.

(With inputs from agencies.)