SBI forecasts GDP growth of 6.3%, lower than RBI’s 6.6% estimate for FY25

The State Bank of India (SBI) has projected India’s gross domestic product (GDP) would grow at 6.3% during.

The ongoing fiscal year (FY25), lower than the Reserve Bank of India’s (RBI) estimate of 6.6%, revised from the earlier 7.2%. The SBI said, “We believe that GDP growth for FY25 will be lower than the RBI estimate and we are pegging it at 6.3%. ”

On Friday, RBI Governor Shaktikanta Das announced the central bank’s revised projection for GDP growth. This came after the country’s economy grew at 5.4% in the July-September quarter of FY25, with this being the lowest growth in seven quarters.

This also marked the first instance in five years of the RBI initially revising its growth estimate upward – from 7% to 7.2% in this case – only to lower it later. Though such adjustments were common in earlier years, these followed a consistent pattern of downward revisions.

However, the SBI noted that a downward projection was “nothing new.”

Its analysis stated, “Such a downward revision is nothing new as in FY22 and 23, the forecasts were downgraded on an average by 90 basis points (bps).” Meanwhile, on the RBI’s move to cut the Cash Reserve Ratio (CRR) by 50 bps to 4%, the SBI said it expected a “positive but modest” impact on banks’ net interest margins.

“While the CRR reduction may not directly impact deposit or lending rates, it could positively affect banks’ net interest margins by a modest 3-4 bps,” as per the largest private sector lender.

The CRR will be reduced in two phases, at 25 bps in each stage. The cuts will become effective on December 14 and 28 and the move is expected to inject ₹1.16 lakh crore into the banking system.