The State Bank of India (SBI) has released a report predicting that India’s GDP growth for the second quarter of the fiscal year could be around 6.5 per cent. While the report noted a slight dip in growth for Q2, it suggested that the slowdown may only be temporary. The growth is expected to be driven by increasing rural demand, which is seen as a positive sign of improved income levels in those areas.
The report mentioned that recovery has been observed in October, indicating that the third and fourth quarters could bring the overall GDP growth for FY25 close to 7 per cent. The report estimates that Q2FY25 GDP growth will be approximately 6.5 per cent, with expected growth in Q3 and Q4 pushing the overall yearly GDP growth closer to 7 per cent in FY25.
The report emphasized the importance of accurately capturing “soft data” to reflect changing consumer behaviors, particularly as quick commerce (Q-commerce) gains momentum in urban areas. It also highlighted the robust nature of rural demand, which has been supported by high consumer sentiment. This positive sentiment suggests that government initiatives aimed at assisting the lower-income population are having a positive impact.
Rural consumer sentiment has consistently remained above 100 over the first half of FY25 and is gradually aligning with urban consumer sentiment levels. The report cautioned against policy decisions that could create short-term fiscal pressures, advising against initiatives like loan waivers and universal crop price guarantees, which it deemed as “unscientific” and potentially harmful in the long term.
The report also noted the positive implications of higher consumer sentiment in rural areas, stating that it will lead to increased consumer spending, supporting rural markets, job creation, and income generation. This trend of upward rural demand is expected to contribute to overall economic growth, ultimately helping India’s GDP achieve a strong finish to FY25.
In conclusion, the State Bank of India’s report suggests that India’s GDP growth for the second quarter of FY25 could be around 6.5 per cent, with the potential for a close to 7 per cent overall growth for the fiscal year. The report highlights the importance of accurately capturing changing consumer behaviors and the positive impact of increasing rural demand on income levels and economic growth. It also cautions against policy decisions that could create short-term fiscal pressures and emphasizes the need for sustainable measures to support economic development in the long run.
