New Delhi: India’s economy appears to be growing as corporate profitability has risen, with India Inc’s profit to gross domestic product (GDP) climbing from 3.4% in financial year (FY) 2023 to 4.3% in FY26, according to a report by the Mint.

The latest GDP numbers have been released and India’s economic momentum has grown in FY26, with real GDP growth climbing to 7.7% – up from 7.1% in FY25 – while gross value added (GVA) rose to 7.9% from 7.3% the previous year. Meanwhile, nominal GDP growth moderated to 8.9% – down from 9.7% in FY25 – amid softer inflation.

According to the daily, this was largely driven by manufacturing and services on the supply side, whereas private spending and a rebound in capital investments fuelled the demand side.

Aggregate profits of BSE 500 companies surged 14% year-on-year, against the 8% growth in the previous fiscal. However, underlying demand trends remained soft, with revenue growth ticking up only slightly to 7% from 6.4% in the prior year.

While on paper India Inc appears to be doing really well, these impressive figures mainly account for the profits of larger companies and do not necessarily reflect the performance of the entire corporate sector.

“Aggregate numbers tend to be influenced by the larger companies,” Madan Sabnavis, chief economist at Bank of Baroda, was quoted as saying by Mint.

The top 50 companies accounted for a 2.2% share in the country's economic output in FY23, which rose to 3.0% by FY26, driven by banking, financial services, and insurance (BFSI) firms as their profit-to-GDP ratio climbed to 1.7% from 1.3% three years ago.

Meanwhile, the information technology sector is showing signs of softening with its  ratio slipped from 0.4% to 0.3% in FY26. This reflects a cautious global tech-spending environment amid AI-driven uncertainties.

Oil and gas sector, though volatile, emerged as a significant contributor. However, its share see-sawing from 0.4% in FY23 to 0.7% in FY24, and again 0.5% by FY26.

With the continuing geopolitical tensions, it is still unclear whether India would be able to sustain this growth or will the global volatility derail this momentum.

For FY27, the Reserve Bank of India has projected a 6.6% GDP growth, keeping in mind the elevated energy prices, supply-chain disruptions and a weaker global backdrop due to the West Asia conflict.

Moreover, there are also other risks like the El Niño patterns and a sub-normal monsoon that could impact food inflation and dampen the rural demand.

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