New Delhi, Sep 1
Morgan Stanley has raised its forecast for India’s GDP growth in 2025-26 on the back of the robust 7.8 per cent growth in the April-June quarter and expects the forthcoming cuts in GST to spur domestic demand, which would offset the decline in exports due to the US tariff hike.
"We expect impending GST tax cuts, the upcoming festive season and strong trends in rural demand to provide a fillip to domestic demand. As such, we expect the composition of growth to change with public spending softening, external demand weakening (mainly goods exports) and private sector demand picking up," the report said.
"We estimate that the incremental drag from external demand at around 50 basis points (bps) could potentially be offset from likely GST cuts, which could boost growth by about 50bps," it added.