Morgan Stanley Upgrades India’s Growth At 6.2% for FY26, 6.5% For FY27

New Delhi: Global monetary services and products main Morgan Stanley on Wednesday upgraded its GDP expansion forecast for India at 6.2 consistent with cent in FY26 and 6.5 consistent with cent for FY27, announcing that home call for traits would be the key driving force of the rustic’s expansion momentum amid lingering uncertainty at the exterior entrance. 

The previous expansion forecast used to be 6.1 consistent with cent for FY26 and 6.3 consistent with cent for FY27.

“We expect growth to remain resilient, supported by strength in domestic demand amidst uncertainty from external factors,” mentioned the worldwide brokerage in its observe.

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

Within home call for, the brokerage expects intake restoration to change into extra broad-based with city call for bettering and rural intake ranges already tough.

“Within investments, we see public and household capex driving growth while we expect private corporate capex to recover gradually,” it famous.

Morgan Stanley expects headline inflation to stay benign because of decrease meals inflation and the range-bound development in core inflation.

The IMD’s forecast of an above-normal monsoon for 2025 is more likely to make stronger the cropping season, which, along with serving to to construct wholesome buffer shares, is more likely to make certain that meals costs stay benign, in line with the observe.

“As such, we expect inflation to remain decisively below the 4 per cent mark over the next few months and average 4 per cent (on-year) in F2026 and 4.1 per cent in F2027,” the observe learn.

It additionally expects the RBI to reply with a deeper easing cycle, premised on slower expansion, whilst inflation stays below keep an eye on.

“As such, we pencil in a cumulative easing of 100bps, with two more rate cuts of 25bps each in this rate easing cycle,” mentioned the brokerage.

Moreover, it expects the RBI to proceed easing throughout its different levers of liquidity and laws.

“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,” the observe mentioned.

The dangers to expansion outlook stay flippantly balanced, amidst an bettering outlook for cross-country industry offers. On the upside, an acceleration in US expansion, in conjunction with sooner answer of industry and tariff-related uncertainty, may just strengthen investor sentiment and the capex cycle.