The State Bank of India (SBI) has projected that India’s gross domestic product (GDP) will grow at 6.3% during the ongoing fiscal year (FY25), lower than the Reserve Bank of India’s (RBI) estimate of 6.6%, which was revised from the earlier 7.2%.
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 by 5.4% in the July-September quarter of FY25, marking the lowest growth in seven quarters.
This also marked the first instance in five years of the RBI initially revising its growth estimate upwards—from 7% to 7.2%—only to lower it later. While such adjustments were common in earlier years, they followed a consistent pattern of downward revisions.
However, SBI noted that downward projections were “nothing new.”
Its analysis stated, “Such a downward revision is nothing new, as in FY22 and FY23, the forecasts were downgraded on average by 90 basis points (bps).”
Meanwhile, regarding the RBI’s move to cut the Cash Reserve Ratio (CRR) by 50 bps to 4%, 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,” according to the largest private sector lender.
The CRR will be reduced in two phases, by 25 bps in each stage. The cuts will take effect on December 14 and 28, with the move expected to inject ₹1.16 lakh crore into the banking system.
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