New Delhi [India], July 7 : Corporate revenue growth in India may face a slowdown in the coming financial year due to weaker nominal GDP growth, according to a recent report by Jefferies.
The report estimates that India's nominal GDP growth is likely to ease to 9 per cent in FY26. This would be the second-lowest pace since FY04, excluding the pandemic-hit FY21.
The slowdown in nominal GDP growth is expected, despite stable real GDP growth of 6.5 per cent, mainly due to lower inflation, which is weighing down overall nominal growth.
Jefferies stated that a softer nominal GDP growth could affect several key economic indicators, including corporate revenues and credit growth.
It said "Don't expect corporate revenue growth to bounce materially in FY26," adding that weaker nominal variables may also drag down earnings momentum.
The report also highlighted that credit growth in the country, which generally moves in line with nominal GDP, is already showing signs of moderation.
While the Reserve Bank of India (RBI) is likely to maintain a pro-growth stance to support bank lending, Jefferies does not expect bank credit growth to rise beyond 11-12 per cent by March 2026.
The report also pointed out that 9 per cent nominal GDP growth in FY26 would be the lowest since FY20. It noted that India's nominal GDP growth is expected to decline by 1 percentage point year-on-year, reaching a six-year low of 9%.
Historically, since FY04, nominal GDP growth has fallen below 10 per cent only once, in FY20, when it grew by just 6.4 per cent. That year, real GDP had grown at 3.9 per cent and the GDP deflator was around 2.5 per cent.
On average, India's nominal GDP growth between FY04 and FY25 has been about 12.6 per cent. The report suggested that a decline from that average could indicate a period of slower earnings and limited credit expansion, affecting business growth and financial sector momentum.