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Key Points

India's economic outlook remains promising despite global uncertainties, with SBI projecting a steady 6.4-6.5% GDP growth in Q4 FY25. The forecast is backed by a sophisticated 'Nowcasting Model' utilizing 36 high-frequency economic indicators. An early monsoon and potential agricultural growth could further strengthen the economic landscape. Household consumption, particularly in rural areas, is expected to play a crucial role in sustaining economic momentum.

Key Points: SBI Forecasts 6.5% GDP Growth for India in Q4 FY25

  • - SBI uses 36 high-frequency indicators to estimate economic performance
2 min read

India's GDP growth in Q4 FY25 to remain robust around 6.4-6.5 pc: SBI report

SBI's economic model predicts robust growth despite global challenges, with promising monsoon and agricultural outlook for India's economy.

"As per our 'Nowcasting Model', the forecasted GDP growth for Q4 FY25 should come around 6.4-6.5 per cent - Dr. Soumya Kanti Ghosh, SBI"

New Delhi, May 21

Despite weathering effects precipitated by global upheavals, Indian economy stays largely resilient and is projected to clock a GDP growth around 6.4-6.5 per cent in Q4 FY25, an SBI report said on Wednesday.

To estimate GDP statistically, the State Bank of India's Economic Research Department has built a 'Nowcasting Model' with 36 high frequency indicators associated with industry activity, service activity, and global economy.

The model uses the dynamic factor model to estimate the common or representative or latent factor of all the high frequency indicators from Q4 of FY13 to Q2 of FY23.

"As per our 'Nowcasting Model', the forecasted GDP growth for Q4 FY25 should come around 6.4-6.5 per cent," said Dr Soumya Kanti Ghosh, Group Chief Economic Advisor, SBI.

Assuming there are no major revisions in Q1 to Q3 estimates in the upcoming data release by NSO, "we expect FY25 GDP to stand at 6.3 per cent," Ghosh mentioned.

The India Meteorological Department (IMD) has said the southwest monsoon is likely to arrive in Kerala within the next four to five days -- well ahead of its normal onset date of June 1.

If the monsoon arrives in Kerala as anticipated, it would mark the earliest onset over mainland India since 2009, when it began on May 23.

"India is targeting 354.64 million tonnes of foodgrain production in the 2025-26 crop year starting July on the forecast of better monsoon rains. In the current 2024-25 crop year, the government had set a target of 341.55 million tonnes of foodgrain production (so far: 332.3 million tonnes)," the SBI report mentioned.

Further, taking a cue from household survey, slowdown in current household inflation expectations encourages higher discretionary spending and drives demand-led growth while status quo in consumer confidence suggests that households are uncertain about the global developments and economic prospects - caution somewhat writ large on sustainable growth from a short-term perspective.

The swift escalation of trade tensions and extremely high levels of policy uncertainty are expected to have a significant impact on global economic activity. AS per IMF, global growth is projected to drop to 2.8 per cent in 2025 and 3 per cent in 2026.

"For India, the growth outlook is relatively more stable at 6.2 per cent in FY25 (6.3 per cent for FY26), supported by private consumption, particularly in rural areas, but this rate is 30 bps lower than the earlier estimate on account of higher levels of trade tensions and global uncertainty," the report mentioned.

- IANS

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Reader Comments

Here are 6 diverse Indian perspective comments for the GDP growth article:
R
Rahul K.
Good news but I hope this growth translates to better jobs and wages for middle class. The report mentions rural consumption - that's positive but urban job market still feels sluggish. Govt should focus on manufacturing sector employment.
P
Priya M.
Early monsoon prediction is the real game changer here! 🇮🇳 Our agricultural output can really boost GDP if rains are good. Farmers in my village are already preparing fields. Fingers crossed for normal rainfall distribution across states 🤞
A
Amit S.
While 6.4% looks impressive, we must note it's lower than earlier estimates due to global factors. The report itself warns about trade tensions - our exports sector could face challenges. Need more self-reliance in critical industries.
S
Sanjana R.
The 'Nowcasting Model' with 36 indicators sounds impressive! Shows how far our economic analysis has come. But I wonder - how much does this growth benefit ordinary citizens? Petrol prices still pinch our pockets every month 😅
V
Vikram J.
Positive numbers but let's not celebrate yet. Global economic slowdown will impact us too. The report mentions household uncertainty - very true. My business clients are holding back investments waiting for US-China trade situation to stabilize.
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Neha P.
Foodgrain target of 354 million tonnes is ambitious but necessary with population growth. Hope the monsoon cooperates! On another note, would love to see more data on how this growth benefits women entrepreneurs and self-help groups.

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