India's Corporate Sector and GDP Growth
Despite robust economic growth in India, the corporate sector's growth remains sluggish. Corporate revenues are trailing behind the growth in India’s Gross Domestic Product (GDP), particularly for non-banking, financial services, and insurance (non-BFSI) companies.
Corporate Revenue vs. Nominal GDP
- In Q1FY26, the net sales of listed non-BFSI companies increased by only 5.3% year-on-year (Y-o-Y), compared to an 8.8% growth in India’s nominal GDP.
- From Q1FY24, India’s nominal GDP has grown 9.6% Y-o-Y on average, whereas non-BFSI companies' net sales increased by just 4.5% Y-o-Y.
BFSI Sector Performance
- The BFSI sector's net sales grew by 8.4% Y-o-Y in Q1FY26, a drop from 16.6% Y-o-Y growth the previous year.
- Previously, between Q2FY23 and Q2FY25, the BFSI sector grew at an average of 20% Y-o-Y, outpacing the GDP growth of 10% Y-o-Y.
Historical Performance of Corporate Sector
- Non-BFSI companies have struggled to match GDP growth in two-thirds of the quarters since Q4FY13.
- Between Q4FY13 and Q2FY18, non-BFSI companies' net sales grew at 3.4% Y-o-Y, versus 11.1% Y-o-Y GDP growth.
- In the period Q1FY20 to Q3FY21, non-BFSI companies saw a 7.7% Y-o-Y decline, while GDP grew by 1.1% Y-o-Y.
- Overall, the corporate sector lagged behind nominal GDP in 33 of the last 50 quarters.
Analyst Insights
- There is a noticeable disconnect between GDP growth and corporate performance. Analysts note corporate revenues have lagged behind both nominal and real GDP.
- For instance, while private consumption grew by 9.2% Y-o-Y at current prices in Q1FY26, consumer companies reported only 5-6% growth in revenues.
- GDP growth has been attributed to the stronger performance of the non-corporate sector, including small and medium enterprises and the farm sector.