India’s growth rate in the current financial year is expected to be around 6.3 percent. This latest estimate has been made in the research report of SBI. However, this is slightly less than the government’s estimate of 6.4 percent. This estimate has been made due to many factors like weak demand. According to the first advance estimates (FAE) of national income for 2024-25 released by the National Statistical Office (NSO) on Tuesday, India’s economic growth rate will decline to 15 per cent in 2024-25 due to poor performance of the manufacturing sector and weak investment, PTI reported. It is projected to reach a four-year low of 6.4 percent in 25.
There will be a downward trend
According to the news, SBI’s research report ‘Ecowrap’ states that the difference between the estimates of Reserve Bank of India (RBI) and NSO is always in the range of 20-30 basis points. Therefore, the estimate of 6.4 percent for the financial year 2024-25 is expected and appropriate. The report said that, however, we believe that the GDP (Gross Domestic Product) growth rate for FY 2025 may remain around 6.3 percent, which will have a declining trend.
Expected to see significant growth in the current financial year
The report written by Soumya Kanti Ghosh, Group Chief Economic Advisor, State Bank of India (SBI), also said that nominal GDP per capita is expected to grow significantly in the current financial year ending March 2025, which is less than real GDP. Rs 35,000 higher than in 2022-23 despite a slowdown in growth and nominal GDP growth remaining almost stagnant. Items that contributed positively included government consumption, which grew by 8.5 per cent in nominal terms (4.1 per cent in real terms), the report said. Exports also led the way with a positive growth of 8 per cent (5.9 per cent in real terms).
The worrying aspect of demand is the slowdown in gross capital formation.
The worrying aspect of demand is the slowdown in gross capital formation, SBI research said, adding that capital formation nominal growth has declined by 270 basis points to 7.2 per cent. The overall picture is that demand remains weak and a sequential slowdown of 6.4 per cent in FY2025 is an outlier while actual growth is certainly below the projected figure. The report further said that the fiscal deficit at the end of November 2024 stood at Rs 8.5 lakh crore or 52.5 per cent of the budget estimate. The report said that if the government sticks to the fiscal deficit of Rs 16.1 lakh crore, with the revised GDP figures, the deficit as a percentage of GDP will be 5 per cent in 2024-25.
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