{"id":443861,"date":"2026-02-02T02:08:11","date_gmt":"2026-02-02T02:08:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/443861\/"},"modified":"2026-02-02T02:08:11","modified_gmt":"2026-02-02T02:08:11","slug":"budget-2026-seen-driving-cyclical-growth-nominal-gdp-growth-pegged-at-10-for-fy27-morgan-stanley","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/443861\/","title":{"rendered":"Budget 2026 seen driving cyclical growth, nominal GDP growth pegged at 10% for FY27: Morgan Stanley"},"content":{"rendered":"

The Union Budget 2026\u201327 is likely to support a cyclical growth while simultaneously reinforcing India\u2019s long-term structural strengths, according to a report by Morgan Stanley<\/a>. Moreover, the fiscal assumptions underpinning the Budget were also described as \u201crealistic\u201d, with nominal GDP growth pegged at 10% for FY27 and direct tax revenues expected to rise by 11.4%.
Morgan Stanley noted that central government capital expenditure is projected to remain at 3.1% of GDP in FY27, broadly unchanged from the revised estimates for FY26.
In an overview report of the budget document, the global brokerage firm said the PM Modi-led Central government\u2019s continued stress on capital expenditure, alongside measures to boost manufacturing competitiveness and services-sector attractiveness, positions the economy for steady expansion in FY27.<\/p>\n

This sustained capex push, the report said, should aid near-term growth momentum while laying the groundwork for future capacity creation. <\/p>\n

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At the heart of the Budget, Morgan Stanley said, is a careful balancing act between fiscal consolidation and growth support.
Also Read | India Budget 2026 Key Takeaways: Trains, treks, chips and coconuts get big mentions<\/a>The fiscal deficit is targeted at 4.3% of GDP for FY27, marginally higher than the brokerage\u2019s own estimate of 4.2 per cent, marking the \u201cslowest pace\u201d of consolidation since the pandemic. <\/p>\n

This approach, the report observed, prioritises economic momentum over aggressive deficit reduction, while still keeping the debt-to-GDP ratio on a declining path, estimated at 55.6% in FY27.<\/p>\n

\u201cThe Budget balances debt to GDP reduction with slow paced fiscal consolidation and support for growth through cyclical and structural measures. It targets a fiscal deficit of 4.3% of GDP for F27 (MSe: 4.2% of GDP), in line with a central government debt to GDP ratio of 55.6% in F27,\u201d read the report.<\/p>\n

Meanwhile, a renewed thrust on infrastructure-led growth<\/a> stands out, with overall capital expenditure set to rise 11.5% year-on-year. Defence capex, in particular, is slated to jump 18%, underscoring a dual focus on physical infrastructure and national security.<\/p>\n

The report also flagged a clear strategic pivot towards manufacturing, especially in frontier and high-value sectors. <\/p>\n

Also Read | Budget 2026: Why HAL, BEL and other defence stocks are falling even after 18% capex hike<\/a><\/p>\n

The prominence given to semiconductors in the Budget speech, including the rollout of India Semiconductor Mission 2.0, support for rare earth magnets and efforts to revitalise legacy industrial clusters, signals a rethinking of India\u2019s industrial priorities. <\/p>\n

\u201cThe budget speech almost begins with the word “semiconductors,” which signals a major pivot in the government’s view of what India should pursue,\u201d the report further read.<\/p>\n

These steps, Morgan Stanley said, could boost capex, aid services-sector growth and accelerate the adoption of emerging technologies such as artificial intelligence.<\/p>\n

On the external front, the Budget\u2019s ambition to raise India\u2019s share of global exports to 10% by 2047 is backed by targeted support for services exports. <\/p>\n

Measures such as tax holidays for data centres and higher safe harbour thresholds for service providers are expected to enhance India\u2019s competitiveness as a global services hub.<\/p>\n

Taken together, Morgan Stanley remains constructive on Indian equities following the Budget. It reiterated its Overweight stance on Financials, Consumer Discretionary and Industrials, arguing that the mix of cyclical support and structural reforms should underpin earnings growth in FY27, aided further by rising equity demand through buybacks.<\/p>\n

\u201cA likely boost to capex, services sector growth and AI, along with slightly slower than expected fiscal consolidation, will likely support F2027 earnings, further helped by increased demand for equities through buybacks,\u201d the brokerage firm read.<\/p>\n","protected":false},"excerpt":{"rendered":"The Union Budget 2026\u201327 is likely to support a cyclical growth while simultaneously reinforcing India\u2019s long-term structural strengths,…\n","protected":false},"author":2,"featured_media":443862,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[208824,28,208818,208823,101,208822,24075,208821,208820,208819,1535,63052,208817,183799],"class_list":["post-443861","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-bel","tag-business","tag-capital-expenditure-fy27","tag-cyclical-recovery-in-growth","tag-economy","tag-fiscal-deficit-india-2026","tag-hal","tag-india-global-exports-target","tag-infrastructure-led-growth","tag-manufacturing-sector-support","tag-morgan-stanley","tag-morgan-stanley-report","tag-nominal-gdp-growth-fy27","tag-union-budget-2026"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/443861","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=443861"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/443861\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/443862"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=443861"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=443861"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=443861"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}