India’s economic growth for the fiscal year 2026 is projected to exceed the National Statistical Office’s initial estimate, according to a report by Morgan Stanley. The report anticipates a real GDP growth rate of 7.6% year-on-year, higher than the NSO’s forecast of 7.4% YoY.
The consensus estimate for FY26 growth stands at 7.5%, with the Reserve Bank of India projecting 7.3%, as mentioned in the report. The combined support from fiscal and monetary policies, along with improved purchasing power and labor market conditions, is expected to drive a broader recovery in consumption.
The report also foresees a more widespread increase in capital expenditure, driven by enhanced investor confidence stimulating private investments. Despite global uncertainties related to tariffs and geopolitics, domestic demand is likely to fuel growth, with an expected growth rate of 6.5% YoY in F2027.
In the second half of FY26, real GDP is forecasted to grow at around 6.9%, a decrease from the 8% growth in the first half. Nominal GDP growth is projected to soften to 8% YoY from 9.7% in FY25 due to a weak deflator, the report highlighted.
The report further suggests that consumption may slow down in the latter half of the fiscal year compared to the first half, while capital expenditure is poised to accelerate. Another recent report from HDFC Bank indicated a potential surge in India’s tax collections for FY27, with gross tax buoyancy expected to rise to 1.1 from the projected 0.64 in FY26.
