Morgan Stanley cuts India’s FY27 growth forecast to 6.2%

Informist New Delhi

Morgan Stanley sees growth slowing down and inflation rising in India because of the extended war in West Asia and higher energy prices. Economists at the bank also project higher WPI inflation, and wider current account and fiscal deficits, they said in a report.

Morgan Stanley lowered its forecast for India's GDP growth in 2026-27 (April–March) by 30 basis points to 6.2%, while CPI inflation is seen rising to 5.1% this year, 110 bps higher than previously projected. The bank has projected FY28 GDP growth at 6.9%. India's GDP grew 7.8% in the December quarter, based on the new GDP series. The government's second advance estimate has projected FY26 GDP growth at 7.6%.

"The extended geopolitical conflict, leading to elevated energy costs, supply-side constraints and stress on external balances, imply a downside to India's macro outlook," Morgan Stanley said. "We assume crude averages $95/bbl in FY27, with gas availability an additional constraint; elevated prices and curtailed industrial supply are raising input costs, forcing selective production cuts and adding to imported inflation amid INR weakness," the report said.