India on track for 6.5-7% real GDP growth this fiscal, earnings seen accelerating

New Delhi: According to Jefferies, India is poised to achieve real GDP growth of 6.5-7% in the current fiscal year, with nominal GDP growth projected at 11-12%. The brokerage expects corporate earnings growth to accelerate to 17% next fiscal year, up from 14% this fiscal. Despite geopolitical challenges and energy risks, India's structural growth story remains intact, with economic indicators showing resilience beyond expectations.

The brokerage attributes the improved nominal GDP growth to economic momentum, supported by strong bank credit expansion. Bank credit surged 19.1% year-on-year at the end of August, while corporate lending grew 21.6% in July. Loans to micro, small, and medium enterprises increased by 24.9%, propelled by deposit growth of 17.8% in August.

This trend in SME lending may signal that recent GST and labor reforms, along with initiatives to enhance ease of doing business, are starting to deliver results. Additionally, corporate lending indicates a potential revival of private sector capital expenditure.

Domestic demand remains robust, with GST receipts rising 14.8% year-on-year in August and power demand accelerating to 9.4% from January-March's 1.8%. Residential real estate sales across the top seven cities grew 7% year-on-year in the first seven months of 2026, contrasting with a 1% decline in 2025.

India's outlook remains vulnerable to developments in the Middle East, particularly energy price fluctuations. Brent crude stands at approximately USD 106 per barrel, and disruptions along key oil routes are putting pressure on energy markets. However, India has so far managed to circumvent significant energy supply disruptions by relying on discounted Russian crude and increasing US energy imports. The brokerage anticipates the RBI to raise rates by 50 basis points by year-end 2026, from the present repo rate of 5.25%.