The GDP growth is expected to be about 6.3 per cent in the current fiscal year, a tad lower than the government’s estimates of 6.4 per cent, owing to several factors such as weak demand, SBI research report said on Wednesday.

According to the first advance estimates (FAE) of National Income for 2024-25 released by the National Statistics Office (NSO), released on Tuesday, India’s economic growth rate is estimated to slip to a four-year low of 6.4 per cent in 2024-25, because of poor showing by the manufacturing and subdued investments.

Historically, the difference between the estimates of the Reserve Bank of India (RBI) and the NSO is always in the range of 20-30 bps and hence the 6.4 per cent estimate for the 2024-25 fiscal year is along expected and reasonable lines, the SBI’s research report ‘Ecowrap’ said.

“We, however, believe that GDP (gross domestic product) growth for FY25 could be around 6.3 per cent, with downward bias,” it said.

The report authored by Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India (SBI), also said as per capita nominal GDP is expected to increase significantly in the current fiscal ending March 2025, by Rs 35,000 more than 2022-23, despite a slowdown in real GDP growth and nominal GDP growth remaining almost stagnant.

The FAE of the GDP in general shows a slowdown in aggregate demand in 2024-25, it said.

The heads that have positively contributed include government consumption with a growth of 8.5 per cent in nominal terms (4.1 per cent in real terms). Exports have also held the fort with positive growth of 8 per cent (5.9 per cent in real terms).

The worrying aspect of the demand is marked slowdown in gross capital formation, SBI’s study said, adding that the capital formation nominal growth declined 270 bps to 7.2 per cent.

“...Overall picture is that demand remains weak and sequential slowdown in FY25 at 6.4 per cent is an outer limit while the actual growth is definitely below the estimated figure,” it said.

The report further said that the fiscal deficit at the end of November 2024 stood at Rs 8.5 lakh crore, or 52.5 per cent of the Budget Estimates (BE).

However, taking into account the revised GDP figures, if tax receipts grew by the BE, government expenditure lowered due to low CAPEX then fiscal deficit will be 4.9 per cent of the GDP in 2024-25, SBI’s research said.

While, if government sticks to the fiscal deficit of Rs 16.1 lakh crore, then with the revised GDP numbers, the deficit as per cent of GDP would be at 5 per cent in 2024-25, the report said.

In the Union Budget, the government projected to bring down the fiscal deficit to 4.9 per cent of the GDP in the current financial year.