Nomura Says India’s GDP In FY25 To Grow At A Lower Pace Than RBI's Projections

The analysts at the brokerage noted that they expect a downside risk to the growth projections of 7.2 per cent for the 2025-26 financial year (FY26)

The RBI earlier gave a GDP growth estimate of 7.2 per cent for FY25.

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India’s gross domestic product (GDP) is expected to grow at 6.7 per cent in the 2024-25 fiscal year (FY25) on a year-on-year (YoY) basis, the latest report by Nomura revealed. The brokerage’s estimate places India’s economic growth 50 basis points (bps) lower than the Reserve Bank of India’s (RBI’s) expectations for the current fiscal year. 

The RBI earlier gave a GDP growth estimate of 7.2 per cent for FY25. The analysts at the brokerage noted that they expect a downside risk to the growth projections of 7.2 per cent for the 2025-26 financial year (FY26), reported Moneycontrol.

The report tracked the growth in auto sales, including passenger vehicles (PVs), and medium and heavy commercial vehicles (MHCVs), and found that the figures for July and August both were ‘disappointing’.

“Growth signals are currently mixed. Catch-up in government spending and rural demand are positives, but softness in consumer discretionary demand, industrial demand and external demand are negatives,” the report noted.

“To gauge cyclical growth, we have found that sales of passenger vehicles (PV) and medium and heavy commercial vehicles (MHCV) are important. PVs signal discretionary consumer demand, while MHCV sales have a high beta to overall industrial activity,” the report added. The brokerage analysed the vehicle sales to oversee cyclical growth and highlighted that the statistics showed a slump. Nomura further stated that the net GDP growth is set to dampen to 6.7 per cent on a YoY basis in FY25, slipping below the RBI’s projection of 7.2 per cent.

"PV and MHCV sales both disappointed in July and August. Wholesale PV sales growth fell to -2.0 per cent YoY in July and -2.5 per cent in August, while MHCV sales growth declined to -7.1 per cent and -10.7 per cent, respectively. Inventories for PVs have risen from 55-60 days in May to 70-75 days in August, with hopes now pinned on the festive season," the brokerage noted.