India is on track to record real GDP growth of 6.5-7 per cent in the current fiscal, while nominal GDP growth is expected to be around 11-12 per cent, according to a latest report by brokerage Jefferies.The brokerage also expects corporate earnings growth to accelerate to 17 per cent in the fiscal year beginning April 2027, from an estimated 14 per cent in the current fiscal.Jefferies said India’s structural growth story remains intact despite geopolitical challenges and elevated energy risks, with economic indicators showing greater resilience than expected.
Bank credit points to stronger economic activity
Jefferies highlighted strong bank credit growth as a key indicator of economic momentum.Bank credit expanded 19.1 per cent year-on-year at the end of August, while corporate lending grew 21.6 per cent in July. Loans to micro, small and medium industrial enterprises rose 24.9 per cent, supported by deposit growth of 17.8 per cent in August.According to the brokerage, the pickup in SME lending could indicate that recent GST and labour reforms, along with efforts to improve the ease of doing business, are beginning to generate benefits.The increase in corporate lending also points to a possible revival of the long-awaited private-sector capital expenditure cycle, Jefferies said.
Domestic demand remains firm
The brokerage said domestic demand has remained resilient, with GST receipts rising 14.8 per cent year-on-year in August.Power demand growth also accelerated to 9.4 per cent during April-August, compared with 1.8 per cent in January-March.Residential real estate sales across the top seven cities rose 7 per cent year-on-year in the first seven months of 2026, compared with a 1 per cent decline in 2025.Jefferies expects the improvement in nominal GDP growth to support a pickup in corporate earnings growth from 14 per cent in the current fiscal to 17 per cent in the fiscal year beginning April 2027.
Energy risks remain a key concern
The brokerage said India’s economic outlook remains exposed to developments in the Middle East, particularly through their impact on energy prices.Brent crude was around $106 per barrel at the time of the report, while disruptions around key oil routes were adding pressure to energy markets.Jefferies said India has so far avoided significant energy supply disruptions by continuing to source discounted Russian crude while also increasing purchases of US energy.The brokerage expects the Reserve Bank of India to raise the repo rate by 50 basis points by the end of 2026 from the current rate of 5.25 per cent.