New Delhi, Sep 18 — India is on course to achieve real GDP growth of 6.5-7 per cent in the current fiscal year, with nominal GDP growth expected to remain around 11-12 per cent, supported by strong domestic demand, accelerating bank credit and improving economic activity, according to a report released by Jefferies.
In its latest GREED & Fear report, Jefferies said India's economic performance has been stronger than anticipated six months ago due to broad-based expansion in credit and improving demand indicators.
It further highlighted that bank credit growth accelerated to 17.8 per cent year-on-year in July.
Lending to micro, small and medium enterprises (MSMEs) grew by 24.9 per cent, while credit to industry increased 20 per cent and loans to the services sector rose 22.9 per cent and corporate lending expanded 21.6 per cent.
"The pickup in corporate lending also suggests that the long anticipated private sector capex cycle may finally be happening," it noted.
Mahesh Nandurkar, Head of India Research at Jefferies said earnings growth is projected to rise from 14 per cent in the current fiscal year to 17 per cent in the next fiscal year beginning April 1.
The report also pointed to continued resilience in domestic demand.
Moreover, GST collections increased 14.8 per cent year-on-year in August while power demand growth accelerated to 9.4 per cent during April-August, compared with 1.8 per cent in the January-March period.
Apart from that, strong foreign currency inflows were seen under the Reserve Bank of India's initiative under which the government mobilised a better-than-expected $136 billion in foreign currency deposits from non-resident Indians.
On the fiscal front, the brokerage noted that the government's consolidation efforts remain on track with the fiscal deficit projected at 4.3 per cent of GDP this fiscal year and expected to decline further in the years ahead.