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 SBI 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.
