New Delhi, Nov. 19 -- India's economic growth will remain firmly anchored by domestic demand even as external conditions stay uncertain, Morgan Stanley said in its 2026 India Economics Outlook, projecting a "continued Goldilocks environment" for Asia's third-largest economy.

The report forecasts real GDP growth of 6.8 per cent in FY26 and 6.5 per cent in FY27-28, driven primarily by an uptrend in household consumption, improving urban sentiment, and a broadening investment cycle.

"The growth trajectory will be supported by a broadening of domestic demand, while external demand remains clouded by uncertainty," the research note states.

Morgan Stanley notes that a pivot in monetary and fiscal policy is helping revive urban consumption, w...