India’s FY26 Growth Likely to Surpass NSO Estimates: Morgan Stanley

New Delhi: India’s economic growth for the financial year 2026 is expected to be stronger than the initial estimates provided by the National Statistical Office (NSO), according to a recent report.

Morgan Stanley projects the real GDP growth for FY26 to reach 7.6%, which is higher than the NSO’s preliminary estimate of 7.4%.

The report also notes that the market consensus for FY26 stands at 7.5%, while the Reserve Bank of India (RBI) estimates a growth rate of 7.3%.

Government spending and supportive monetary policies, along with improved consumer purchasing power and better employment conditions, are expected to boost consumption, thereby strengthening economic recovery.

Morgan Stanley further highlights that increased investor confidence will likely lead to a surge in private sector investment and capital expenditure. Domestic demand is anticipated to remain the primary driver of growth, although external demand may face challenges due to global tariff issues and geopolitical tensions.

The report forecasts a slowdown in growth to around 6.5% in FY27.

According to the brokerage, GDP growth in the second half of FY26 is projected at approximately 6.9%, compared to about 8% in the first half. Nominal GDP growth is expected to decline from 9.7% in FY25 to around 8% in FY26.

Data for the second half of the current financial year indicates a possible decrease in consumption compared to the first half, while capital expenditure is expected to rise.

Additionally, a recent report by HDFC Bank suggests that tax collection may see a robust increase in FY27, with the overall tax buoyancy rising from an estimated 0.64 in FY26 to 1.1.

The report also anticipates nominal GDP growth to increase to about 10.1% in FY27 from the estimated 8.5% in FY26. Capital expenditure is expected to grow by 10.5%, reaching between ₹11.5 to 12 lakh crore, while revenue expenditure could rise by 9.5%.