India Inc's profit contribution to GDP likely to jump three times

The Centre's move in 2019 to cut base corporate tax from 30 per cent to 22 per cent, too, will lead to an improvement in the profit-to-GDP ratio

India Inc’s contribution to gross domestic product (GDP) is predicted to nearly treble by FY23. The ratio in FY20 was the lowest in two decades, at just 1.8 per cent. The long-term average of profit-to-GDP is about 4.4 per cent. The mean revision premised on the sharp recovery in corporate earnings for the next two financial years.

“Aggregate consensus profit after tax of the top 360 stocks is expected to rise from Rs 4.6 trillion in FY20 to Rs 9.6 trillion (about 5 per cent of GDP) in FY23, at a CAGR of 27 per cent,” says a note by ICICI