India's economic growth is showing stronger momentum than expected, with domestic consumption, rising bank lending and improving activity across key sectors
providing support to the economy. Brokerage Jefferies expects the country to clock real GDP growth of 6.5-7 per cent in the current financial year, while nominal GDP growth could remain in the 11-12 per cent range. In its latest GREED & fear report, Jefferies said India's economic performance has exceeded the expectations it had six months earlier. The brokerage highlighted the acceleration in bank credit, particularly the sharp increase in lending to micro, small and medium enterprises (MSMEs), as an important indicator of improving economic activity. "The result is that India looks on track to achieve 6.5-7 per cent real GDP growth and nominal GDP growth of around 11-12 per cent this fiscal year," the report said. Bank Credit Growth Accelerates Bank lending has emerged as one of the key indicators pointing towards stronger economic activity. According to data cited by Jefferies, overall bank credit expanded 17.8 per cent year-on-year in July. MSME lending recorded an even sharper increase, rising 24.9 per cent during the month. Credit extended to the industrial sector climbed 20 per cent, while services credit increased 22.9 per cent. Corporate lending also registered strong growth of 21.6 per cent. The brokerage said the acceleration in corporate credit could have wider implications for India's investment cycle. After a prolonged period of subdued private-sector capital expenditure, stronger corporate borrowing could indicate that companies are becoming more willing to invest in capacity and expansion. "The pickup in corporate lending also suggests that the long anticipated private sector capex cycle may finally be happening," Jefferies said. Nominal GDP Growth Could Lift Earnings Jefferies also sees the improvement in nominal GDP growth as a potential tailwind for corporate profitability. Mahesh Nandurkar, Head of India Research at Jefferies, expects the acceleration in nominal GDP to contribute to a recovery in earnings growth. According to Nandurkar, earnings growth could rise from 14 per cent in the current financial year to 17 per cent in the next fiscal year, which begins on April 1. A stronger nominal economy can provide companies with support through higher revenues, particularly when economic activity and credit demand are simultaneously improving. Domestic Demand Remains Resilient The brokerage also pointed to several indicators showing that domestic demand has remained firm. GST collections, electricity consumption and residential property sales have all shown improvement, according to the report. Goods and Services Tax receipts increased 14.8 per cent year-on-year in August. Meanwhile, growth in power demand accelerated to 9.4 per cent during April-August, compared with just 1.8 per cent during January-March. The housing market has also shown signs of improvement. Residential real estate area sold across the top seven cities in India rose 7 per cent year-on-year during the first seven months of the current calendar year. This compares with a 1 per cent decline recorded in 2025. Foreign Inflows Add To Economic Support Jefferies also highlighted foreign currency inflows generated through a Reserve Bank of India scheme. Under the programme, the government mobilised $136 billion in foreign currency deposits from non-resident Indians, exceeding expectations. Such inflows can provide additional support to India's external finances and add to foreign currency availability in the economy. Alongside stronger growth indicators, Jefferies noted that the government's fiscal consolidation efforts remain an important part of the economic outlook. The fiscal deficit is estimated at 4.3 per cent of GDP for the current financial year and is projected to decline further in the years ahead. This combination of continued fiscal consolidation and resilient domestic economic activity forms another key element of Jefferies' assessment of India's growth trajectory.
