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Key Points

Morgan Stanley has raised India's GDP growth forecast to 6.2% for FY26 and 6.5% for FY27, citing improving external demand and strong domestic consumption. The firm highlights policy support and public capex as key drivers amid global uncertainties. Urban demand is expected to strengthen while rural consumption remains robust. The RBI's growth projection aligns with Morgan Stanley's optimistic outlook for India's economy.

Key Points: Morgan Stanley Raises India GDP Forecast to 6.5% for FY27

  • Morgan Stanley revises India's FY26 GDP forecast to 6.2% from 6.1%
  • Upgrades FY27 outlook to 6.5% citing easing US-China tensions
  • Domestic demand and policy support to fuel broad-based recovery
  • Public and household capex driving investments amid gradual corporate recovery
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Morgan Stanley upgrades India's growth forecast to 6.2% for FY26 and 6.5% for FY27

Morgan Stanley upgrades India's growth outlook to 6.2% in FY26 and 6.5% in FY27, citing strong domestic demand and policy support.

"Domestic demand trends will be the key driver of India's growth momentum amid lingering uncertainty on the external front – Morgan Stanley"

New Delhi, May 21

Morgan Stanley, a global financial services firm, on Wednesday modestly upgraded its forecast for the Indian economy to 6.2 per cent year-on-year for financial year 2026, up from 6.1 per cent and 6.5 per cent for FY 2027, up from 6.3 per cent.

"We upgrade our growth forecasts modestly to 6.2% YoY (vs. 6.1%) for F2026 and 6.5% YoY (vs. 6.3%) for F2027 in view of the de-escalation of US-China trade tensions, which improves the outlook for external demand at the margin," said the report.

The financial services firm cited the internal economic forces behind the upward revision of India's GDP. It says that domestic demand will remain the primary engine of growth, especially at a time when global uncertainties persist.

"Domestic demand trends will be the key driver of India's growth momentum amid lingering uncertainty on the external front," Morgan Stanley added.

The financial services firm further added that policy support from the government is likely to continue and it will boost domestic demand and growth.

"Policy support is likely to continue through easier monetary policy while fiscal policy prioritises capex. Macro stability is expected to be in the comfort zone with robust buffers," the report added.

The broking firm further added that within domestic demand, consumption recovery will become more broad-based with urban demand improving and rural consumption levels already robust.

On the investment front, it added that public and household capex are driving growth, while the anticipation is that private corporate capex will recover gradually.

"Within domestic demand, we expect consumption recovery to become more broad-based with urban demand improving and rural consumption levels already robust. Within investments, we see public and household capex driving growth while we expect private corporate capex to recover gradually," said the Morgan Stanley report.

On policy front, brokerages anticipated that the central bank, Reserve Bank of India (RBI), will continue with a deeper easing cycle as growth has seen a slowdown and controlled inflation levels.

"On the fiscal policy front, we expect the consolidation path laid down in the Budget to be maintained in our base case with a focus on pushing capex," Morgan Stanley added.

The Reserve Bank of India (RBI) has projected a GDP growth of 6.5 per cent for the fiscal year FY26 .

- ANI

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Reader Comments

R
Rahul K.
This is great news! India's economy is showing resilience despite global uncertainties. The focus on domestic demand and infrastructure spending is the right approach. Hope this growth translates to more jobs and better living standards for all. 🇮🇳
P
Priya M.
While the numbers look positive, I'm concerned about whether this growth will reach rural areas. The report mentions rural consumption is robust, but farmers in my village are still struggling with debt and low crop prices. Growth should be more inclusive.
A
Amit S.
Morgan Stanley's upgrade shows global confidence in India! The capex focus is creating visible infrastructure changes - new highways, metros everywhere. But we need equal focus on manufacturing to compete with China. Make in India must accelerate! 💪
S
Sunita R.
Good to see urban demand improving, but what about inflation? My grocery bills are still too high. The RBI should be careful with rate cuts - we don't want prices shooting up again. Stable growth with controlled inflation is what middle class families need.
V
Vikram J.
The private corporate capex recovery needs to happen faster. As a small business owner, I'm seeing positive signs but banks still make it difficult to get loans. Easier credit for MSMEs would really boost this growth forecast further!
N
Neha P.
These forecasts are encouraging, but let's not forget sustainability. With this growth, we must invest equally in green energy and environmental protection. Development shouldn't come at the cost of our rivers and forests. 🌱

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