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India GDP Growth Slowdown: The flow of bad news for the Indian economy is not stopping. After the National Statistics Office, now the country’s largest government bank, State Bank of India has also predicted a brake on the pace of growth of the Indian economy. SBI has reduced the estimate of GDP growth rate for the financial year 2024-25 to 6.3 percent, which is less than the 6.4 percent estimate of NSO (National Statistical Office). While releasing the GDP growth forecast data on January 7, 2025, NSO said that the growth rate of the Indian economy in the current financial year may be 6.4 percent.
This is the reason for falling GDP growth rate
This research report has been prepared by Soumya Kanti Ghosh, Group Chief Economic Advisor of SBI. According to the SBI Research report, there has been a slowdown in the GDP growth rate in the current financial year due to the pace of lending, slowing down of manufacturing activity and base effect. In its note, SBI said, the matter of concern is that there is a slowdown in all the sub-segments of the industry and it may show a growth rate of 6.2 percent in the financial year 2024-25, which will increase from 9.5 percent in the financial year 2023-24. Was.
GDP growth rate decreased due to manufacturing-mining
The growth rate of manufacturing and mining sectors may slip down in this financial year as compared to the last financial year. The service sector will show a growth rate of 7.2 percent this year as compared to 7.6 percent last year. The growth rate of trade, hotels, transport, communication and broadcasting may decline to 5.8 percent, which was 6.4 percent in the last financial year. Apart from this, the growth rate of financial, real estate and professional services is estimated to be 7.3 percent which was 8.4 percent in the last financial year. According to SBI Research, all these are dragging down the pace of growth of the economy. The public administration subsegment is expected to grow at the rate of 9.1 percent, which had grown at the rate of 7.8 percent in the last financial year.
Increase in per capita GDP by Rs 35000
According to SBI Research, even though the pace of GDP growth rate has slowed down, per capita GDP is expected to increase by Rs 35,000 in the financial year 2024-25. Due to government expenditure and consumption, GDP growth rate in nominal terms is expected to be 8.5 percent while in real terms it is expected to be 4.1 percent.
Center and states reduced expenditure
Quoting CGA in the report, it was told that till November 2024, 56.9 percent of the budget estimate has been spent, in which revenue expenditure has been spent up to 60.1 percent of the budget estimate and capital expenditure has been spent up to 46.2 percent. According to the report, the capital expenditure of the central and state governments may be less than the average expenditure of 4 years. Out of 17 big states, only 5 states have spent more than the average of 4 years, which has affected the GDP growth rate.
The pace of lending by banks has slowed down
The credit growth rate of commercial banks decreased to Rs 11.5 lakh crore this year which was Rs 21 lakh crore last year and a jump of 15.4 percent was seen. According to the study, due to slowing down of the pace of lending, the GDP growth rate will also decrease.
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