Indian Economy Remains Resilient Amid Global Instability, GDP Growth Projected at 6.2%: Morgan Stanley

New Delhi, April 7: Despite global instability, the Indian economy continues to show strength, with GDP growth projected at 6.2% for the fiscal year 2027. This information was revealed in a report released on Tuesday.

Morgan Stanley’s report indicates that growth in the Indian economy will persist. However, rising energy costs, supply chain disruptions, and external pressures pose new challenges.

The report notes that this projection is lower than the previous estimate of 6.5%. The decline is attributed to high crude oil prices, which are expected to average around $95 per barrel.

It also highlights that increasing energy import costs are raising production expenses for businesses, contributing to inflation and putting pressure on the Indian rupee.

Short-term economic growth may further decline, potentially reaching a low of 5.9% year-on-year in the June 2026 quarter.

The primary reasons for this downturn include sluggish industrial activity, tightening financial conditions, and shrinking profit margins.

Nevertheless, the report suggests that improvements in supply conditions and effective government support measures could gradually enhance growth.

The rise in crude oil prices is also expected to increase inflation, with an average retail inflation rate projected at 5.1% for the fiscal year 2027.

According to the report, high input costs, currency weakness, and stable prices for food and goods are likely to keep inflation elevated.

If oil prices exceed $110 per barrel, there could be further pressure from potential increases in retail fuel prices and broader inflation impacts.

The external position of India is also expected to face pressure. The current account deficit is projected to rise to 2.5% of GDP, compared to the previous estimate of around 1%.

This increase is primarily due to rising oil import bills. The report indicates that a decline in capital flows may lead to a balance of payments deficit for the third consecutive year, further straining the rupee.

To manage the situation, policymakers are expected to initially rely on fiscal measures, such as higher subsidies and cost control strategies, which could push the fiscal deficit to approximately 4.3% of GDP.

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