Morgan Stanley Sees India FY26 Growth at 7.6%, Beats Official Estimate

The report from Morgan Stanley estimated real GDP growth at 7.6 per cent year‑on‑year for FY26 -- above the NSO's first advance estimate which pegged real GDP growth at 7.4 per cent YoY.

The consensus estimate for FY26 growth is at 7.5 per cent and the Reserve Bank of India's estimate is 7.3 per cent, the report said.

The combined impetus from fiscal and monetary policy support, improved purchasing power and labour market outlook are likely to ensure consumption recovery gains more breadth.

"Moreover, we anticipate a more broad- based pickup in capex, as improving investor sentiment encourages private investment activity. As such, domestic demand is likely to drive growth, amidst continued tariff and geopolitics-related global uncertainty weighing on external demand. We expect growth at 6.5 per cent YoY in F2027," the report said.

The brokerage added that real GDP is forecast to track at about 6.9 per cent in the second half of FY26 versus 8 per cent in the first half, below the firm's implied 7.3 per cent.

In nominal terms, GDP growth is expected to soften to 8 per cent year‑on‑year from 9.7 per cent in FY25, weighed by a weak deflator, the report noted.

Implied numbers for the second half of fiscal year indicated that consumption will likely slow (compared to first half this fiscal) while capex growth is expected to pick up pace, the report said.

A recent report from HDFC Bank said India's tax collections could surge in FY27, with gross tax buoyancy rising to 1.1 from a projected 0.64 in FY26.

The nominal GDP growth is expected at about 10.1 per cent in FY27 after an estimated 8.5 per cent in FY26, with capital expenditure to grow by 10.5 per cent to about Rs 11.5-12 lakh crore and revenue expenditure may rise 9.5 per cent, it noted.

- IANS