India's nominal GDP may hit a six-year low; corporate revenue growth to lag in FY26: Report
India's corporate revenue and earnings momentum may face headwinds in the upcoming financial year due to an expected moderation in nominal GDP growth, according to a report by Jefferies.
As per news agency ANI, the financial services firm has projected nominal GDP growth to slow to 9 per cent in FY26, marking the second-lowest growth rate since FY2004, excluding the pandemic-hit FY21.
Despite real GDP growth holding steady at around 6.5 per cent, the fall in nominal GDP is attributed to easing inflation. This lower inflation is weighing on the overall nominal growth figures, the report noted. "Don't expect corporate revenue growth to bounce materially in FY26," Jefferies said, adding that softer nominal variables may pull down earnings momentum across sectors.
The slowdown in nominal growth is also likely to impact credit expansion. Historically, credit growth has shown a strong correlation with nominal GDP, and Jefferies warned that the current moderation trend may persist.
While the Reserve Bank of India is expected to maintain a pro-growth approach to encourage bank lending, credit growth is unlikely to exceed 11–12 per cent by March 2026, the report estimated.
Jefferies further pointed out that the projected 9 per cent nominal GDP growth in FY26 would be the lowest since FY20.
In that year, nominal growth had slowed to 6.4 per cent, while real GDP rose just 3.9 per cent and the GDP deflator was around 2.5 per cent.
On average, nominal GDP growth between FY04 and FY25 has been about 12.6 per cent. A drop from that historical norm, Jefferies said, could signal a phase of relatively weaker business growth, lower corporate earnings, and limited credit pick-up, particularly affecting the financial sector and investment momentum.
The report underlines that even in a stable real growth environment, the broader business landscape may face challenges if nominal growth metrics remain subdued.
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