Corporate earnings failed to keep pace with GDP growth in the past decade

The poor performance of earnings over the period is not entirely due to losses of public sector banks

Corporate earnings have failed to keep pace with the trajectory of nominal gross domestic product (GDP) over the past 10 years. The combined net profit of listed companies has grown at a compound annual growth rate (CAGR) of 4.1 per cent, against 12.9 per cent growth in India’s GDP at nominal prices during the period.

In rupee terms, companies’ combined net profit is up 50 per cent, from Rs 2.6 trillion in 2007-08 (FY08) to Rs 3.9 trillion at the end of 2017-18 (FY18). On the other hand, economic output, or GDP at nominal prices, is up 234 per cent,