Corporate sector revenues continue to trail India's robust GDP growth

Even though India’s headline economic growth in recent quarters remained robust, that has not helped the corporate sector to grow at a faster pace. Corporate revenues continue to trail the growth in India’s gross domestic product (GDP). The combined net sales of listed companies — non-banking, financial services and insurance (non-BFSI) — grew slower than India's nominal GDP for the ninth quarter in a row during the first quarter of 2025-26 (Q1FY26). 

Nominal GDP uses current market prices while real GDP takes constant prices from a base year to adjust for implied inflation in the economy called GDP deflator. 

The combined net sales of listed companies, non-BFSI, was up 5.3 per cent year-on-year (Y-o-Y) in Q1FY26 against 8.8 per cent growth in India’s nominal GDP in the quarter. For comparison, corporate revenues were up 6.2 per cent Y-o-Y in Q1FY25 against 9.7 per cent growth in India's nominal GDP in the quarter. 

In the last nine quarters, India's nominal GDP has grown at more than double the pace of growth reported by companies in the non-financial space. The nominal GDP has grown at 9.6 per cent Y-o-Y on average since Q1FY24, compared to 4.5 per cent Y-o-Y growth in the net sales of non-BFSI companies on average during the period. 

The BFSI sector also is now underperforming India's GDP. The net sales (or gross interest income for bank and non-bank lenders) has grown slower than India's nominal GDP in the last three quarters. The sector’s combined net sales was up 8.4 per cent Y-o-Y in Q1FY26, down sharply from 16.6 per cent Y-o-Y growth a year ago. 

In comparison, BFSI had outperformed the country's GDP for nine consecutive quarters between Q2FY23 and Q2FY25.

 

In that period, the BFSI sector had grown at 20 per cent Y-o-Y on average compared to 10 per cent Y-o-Y growth in India's nominal GDP. 

In contrast, corporate revenues had grown faster than the nominal GDP for nine consecutive quarters between Q4FY21 and Q4FY23. In that period, non-BFSI companies' net sales had grown at 28.4 per cent Y-o-Y on average compared to 16.7 per cent Y-o-Y growth in nominal GDP on average in the period. 

A strong show by the corporate sector has, however, been an exception rather than the norm in the last decade or so. The non-BFSI sector has underperformed the nominal GDP in two out of every three quarters since Q4FY13. This is the third episode since 2013 that India Inc has struggled despite relatively healthy GDP growth. 

The non-BFSI companies had underperformed the growth in nominal GDP in 17 out of the 19 quarters during Q4FY13-Q2FY18. In the period, non-BFSI companies' net sales had grown at 3.4 per cent Y-o-Y on average against 11.1 per cent Y-o-Y growth in India's GDP on average. 

The corporate sector again underperformed the GDP for seven consecutive quarters between Q1FY20 and Q3FY21. In that period, non-BFSI companies' net sales declined by 7.7 per cent Y-o-Y on average against 1.1 per cent Y-o-Y growth in India's nominal GDP on average. 

As a result, the corporate sector has underperformed India's nominal GDP in 33 out of the last 50 quarters. The non-BFSI sector median growth has been 6.2 per cent Y-o-Y since Q4FY13 compared to a median growth of 10.5 per cent Y-o-Y in India’s nominal GDP in the period. 

Analysts say that there is a degree of disconnect between GDP numbers and the corporate sector performance. “Corporate revenues have consistently grown slower than both the real and nominal GDP in recent years. For example, GDP numbers project 9.2 per cent Y-o-Y growth in private consumption at current prices in Q1FY26 but consumer companies reported 5-6 per cent Y-o-Y growth in their revenues in the quarter. GDP estimates also project a growth acceleration in the financial, real estate and professional services sector even though the BFSI sector revenue growth halved and IT services companies reported low single-digit growth in Q1FY26,” says Dhananjay Sinha, cohead research and equity strategy at Systematix Institutional Equity.

 

Others say that a relatively faster growth in headline GDP is due to better show by the non-corporate sector. “Large listed companies are struggling to grow by the farm sector, and small- and medium-size enterprises are doing relatively better, pushing the overall GDP growth,” says G Chokkalingam, founder & chief executive officer (CEO), Equinomics Research.