Morgan Stanley has revised India's GDP growth forecast for FY27 to 6.7%, an increase from the earlier estimate of 6.2%. The firm attributes this optimistic outlook to robust domestic demand, supported by government investments in infrastructure and defense, alongside strong services exports. For FY28, GDP growth is expected to reach 7%. Despite these positive indicators, challenges remain, including the ongoing conflict in Iran and elevated oil prices, which could impact growth. The firm projects Q1FY27 growth at 6.5% year-on-year, affected by high commodity prices and supply chain disruptions. However, as these pressures ease, growth is expected to stabilize by March 2027. Inflation is forecasted to average 4.7% in FY27, influenced by rising production costs and currency depreciation. Additionally, higher oil prices could increase the current account deficit to 1.8% of GDP, raising concerns about currency vulnerability and corporate margins.