India GDP Growth Slowdown: The series of bad news for the Indian economy is not stopping. After the National Statistical Office, now the country's largest government bank, State Bank of India, has also predicted a brake on the pace of development of the Indian economy. SBI has reduced the GDP growth rate estimate for the financial year 2024-25 to 6.3 percent, which is even lower than the 6.4 percent estimate of the National Statistical Office. Releasing the data of GDP growth estimates on January 7, 2025, the NSO said that the growth rate of the Indian economy in the current financial year could be 6.4 percent. 

This is the reason for falling GDP growth rate 

SBI Group Chief Economic Advisor Soumya Kanti Ghosh has prepared this research report. According to the SBI research report, the slowdown in GDP growth rate in the current financial year has occurred due to the pace of lending, slowdown in manufacturing activity and base effect. In its note, SBI said, the matter of concern is that there is a slowdown in all subsegments of the industry and it may show a growth rate of 6.2 percent in the financial year 2024-25, which grew at a rate of 9.5 percent in the financial year 2023-24. 

GDP growth rate decreased due to manufacturing and mining 

The growth rate of manufacturing and mining sector may slip down this financial year as compared to 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 fall 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 growth rate of the economy. The public administration segment is expected to grow at a rate of 9.1 percent which grew at a rate of 7.8 percent in the last financial year.  

Per capita GDP increased by Rs 35000

According to SBI Research, even though the pace of GDP growth rate has slowed down, the per capita GDP is expected to increase by Rs 35000 in the financial year 2024-25. Due to government expenditure and consumption, the GDP growth rate can be 8.5 percent in nominal terms while it is estimated to be 4.1 percent in real terms.  

Center and states reduced expenditure 

In the report, CGA was quoted as saying that by November 2024, 56.9 percent of the budget estimate has been spent, in which revenue expenditure is 60.1 percent of the budget estimate and capital expenditure is 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 has declined to Rs 11.5 lakh crore this year from Rs 21 lakh crore last year and a growth of 15.4 percent was witnessed in it. According to the study, the slowdown in the pace of lending will also lead to a decrease in the GDP growth rate.