Why Is Morgan Stanley Forecasting 11% India Growth Over the Next 12 Months?
Morgan Stanley India, led by Ridham Desai, has projected that India’s nominal growth could accelerate to 11% over the next 12 months. The research house believes that the Reserve Bank of India’s reflationary stance, coupled with improving domestic demand and credit expansion, will push the economy into a new phase of cyclical growth.
The projection comes at a time when India’s macroeconomic fundamentals appear robust despite global headwinds. With inflation showing signs of moderation and crude prices stabilising, the RBI is expected to focus on supporting growth through calibrated monetary easing.
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Ridham Desai highlighted that the RBI’s reflation efforts — including up to two more rate cuts in the coming quarters — could meaningfully lift both consumption and investment demand. He expects the combined effect of policy support and improving liquidity to drive corporate profitability and strengthen credit growth in the banking sector.
According to Morgan Stanley, consumption revival and capex recovery will play a pivotal role in sustaining growth momentum. The banking system’s loan growth, currently around 12–13%, is likely to remain strong due to the interplay of healthy balance sheets, declining non-performing assets, and improving deposit mobilisation.
| Parameter | Estimate / Outlook | Notes |
|---|---|---|
| Nominal GDP Growth | 11% | Expected over next 12 months |
| Loan Growth | 12–13% | Driven by credit revival and retail demand |
| Rate Cuts (Expected) | 2 | To support reflation and growth |
| Consumption Outlook | Strong revival | Boosted by urban demand and festive spending |
| Corporate Earnings | Improving | Led by banks and consumption plays |
Beyond monetary policy, the report identifies multiple structural drivers that may sustain growth momentum. These include government-led capital expenditure, private manufacturing investments under the PLI scheme, and ongoing urban infrastructure projects. The brokerage also expects India’s export growth to rebound as Western economies stabilize by mid-2026.
Desai noted that India’s macro mix—moderate inflation, stable current account, and healthy forex reserves—provides policymakers enough room for growth-oriented strategies without risking external stability. This contrasts sharply with several emerging markets that continue to face fiscal tightening pressures.
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However, the report also outlines certain downside risks that could delay the pace of nominal growth recovery. A sharp global slowdown, persistent commodity inflation, or unexpected monsoon shortfalls could temporarily weigh on consumer spending and investment appetite. Morgan Stanley believes these risks remain manageable given India’s policy flexibility and domestic-driven demand base.
With the global economy transitioning toward a lower-interest-rate environment, India’s relative growth premium could attract fresh foreign portfolio flows. Analysts expect incremental FPI inflows into sectors such as financials, infrastructure, and consumption as global investors realign portfolios for 2026 growth themes.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, observes that Morgan Stanley’s 11% growth projection underscores India’s economic resilience. With the RBI likely to balance growth and inflation through targeted rate cuts, investors should focus on sectors benefiting from credit expansion and consumption revival. Banking, auto, and infrastructure could lead the next leg of the rally.
Discover more analytical perspectives and actionable strategies at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on Economic Growth Outlook
- What Factors Are Driving Morgan Stanley’s 11% India Growth Forecast?
- How Could RBI’s Rate Cuts Impact Bank Earnings?
- Which Sectors May Benefit Most from India’s Growth Revival?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
