SBI forecasts a GDP growth of 7% for FY25, which is lower than the RBI's projection of 7.2%, citing global challenges as a factor.

New Delhi [India], August 9: The State Bank of India (SBI) has released a report projecting India's real GDP growth at 7.0 percent year-on-year for FY25, slightly below the Reserve Bank of India's (RBI) forecast of 7.2 percent.

The report attributes the 20 basis point downgrade to emerging global headwinds.

"We anticipate real GDP growth of 7.0 percent y/y in FY25, which is 20 basis points lower than the RBI's estimate, largely due to the quick materialization of global challenges," the report stated.

Despite this downgrade, the report highlights that the Indian economy remains on a robust growth trajectory and is expected to continue as one of the fastest-growing economies this year.

The SBI report bases its GDP estimate for FY25 on several positive factors, including strengthened fiscal buffers supported by dividends, a projected recovery in agricultural activity due to favorable monsoon conditions, and increased private capital expenditure driven by strong manufacturing activity.

On Thursday, the Monetary Policy Committee (MPC) of the Reserve Bank of India maintained its overall growth projection of 7.2 percent for FY25. However, the MPC revised its Q1FY25 growth estimate downward to 7.1 percent, a 20 basis point reduction from its previous forecast, citing lower-than-expected performance in core industry output, corporate profits, and general government expenditure.

RBI Governor Shaktikanta Das outlined the economic growth forecast, projecting a real GDP growth of 7.2 percent for the fiscal year 2024-25 and noting that headline inflation had eased to 5.1 percent in June.

Das stated, "Real GDP growth for 2024-25 is projected at 7.2 percent, with Q1 at 7.1 percent, Q2 at 7.2 percent, Q3 at 7.3 percent, and Q4 at 7.2 percent. For Q1 2025-26, which we are forecasting for the first time, growth is projected at 7.2 percent. The risks are evenly balanced."

He added, "We have slightly moderated the growth projection for the first quarter of the current financial year compared to the previous projection made in June. This adjustment is primarily due to updated data on certain high-frequency indicators, which show lower-than-expected corporate profitability, general government expenditure, and core industry output."