Comparison of basic strength of benzylamine and ammonia According to me, ammonia should be the stronger base for two reasons:


$\ce{-C_6H_5}$ group shows $-I$ effect, due to which electron density on $\ce{N}$ atom of benzylamine decreases
steric hindrance in benzylamine is more than that in ammonia


But their $\mathrm{pK_b}$ values are: benzylamine: $4.70$ and ammonia : $4.75$. High $\mathrm{pK_b}$ value of ammonia shows that it is actually less basic than benzylamine, contrary to my reasoning. Why is it so?
Everything you said is correct, except that it is more relevant to consider the inductive effect of methyl on nitrogen: electron density is donated to nitrogen. 

The inductive effect of phenyl is on the methyl, decreasing its ability to donate electron density to nitrogen, but apparently not completely.

I suppose that if you increased the negative inductive effect of the phenyl group with a couple of nitro groups, the basicity of the compound would decrease.