State Bank of India Predicts 7.0% GDP Growth for India in FY25
The State Bank of India (SBI) has projected that India’s real GDP will grow by 7.0% year-on-year in the fiscal year 2025 (FY25). This is slightly lower than the Reserve Bank of India’s (RBI) forecast of 7.2%. The SBI report attributes the 20 basis points downgrade to emerging global headwinds.
Despite the slight downgrade, the report highlights that the Indian economy continues to show strong growth and is expected to remain one of the fastest-growing economies this year. The GDP estimate for FY25 is based on several positive factors, including enhanced fiscal buffers supported by dividends, an anticipated recovery in agricultural activity due to improved monsoon conditions, and increased private capital expenditure amid strong manufacturing activity.
The Monetary Policy Committee (MPC) of the RBI has maintained its overall growth projection at 7.2% for FY25. However, the MPC has revised its Q1FY25 growth estimate downward to 7.1%, a 20 basis points reduction from its previous forecast. This adjustment is due to lower-than-anticipated performance in core industry output, corporate profits, and general government expenditure.
RBI Governor Shaktikanta Das outlined the economic growth projections, stating, “Real GDP growth for 2024-25 is projected at 7.2% with Q1 at 7.1%, Q2 at 7.2%, Q3 at 7.3%, and Q4 at 7.2%. Real GDP growth for Q1 2025-26 is projected at 7.2%. The risks are evenly balanced.” He added that the growth projection for the first quarter of the current financial year has been slightly moderated due to updated information on high-frequency indicators showing lower-than-anticipated corporate profitability, general government expenditure, and core industries output.
Doubts Revealed
State Bank of India (SBI) -: SBI is one of the largest and oldest banks in India. It provides various banking services to people and businesses.
GDP -: GDP stands for Gross Domestic Product. It is the total value of all goods and services produced in a country in a year.
FY25 -: FY25 means the financial year 2025. In India, a financial year starts on April 1st and ends on March 31st of the next year.
Reserve Bank of India (RBI) -: RBI is the central bank of India. It controls the money supply and interest rates in the country.
global headwinds -: Global headwinds refer to economic challenges or problems happening around the world that can affect a country’s economy.
Monetary Policy Committee -: This is a group of people in the RBI who decide on the interest rates and other policies to control inflation and support economic growth.
Q1FY25 -: Q1FY25 means the first quarter of the financial year 2025, which includes the months of April, May, and June 2024.
core industries -: Core industries are the main industries in a country, like steel, coal, and electricity, which are very important for the economy.
corporate profits -: Corporate profits are the earnings of companies after they have paid all their expenses.
government expenditure -: Government expenditure is the money that the government spends on various services and projects for the country.