According to Chetan Ahya, Chief Asia Economist at Morgan Stanley, the key change in India’s structural story is the clear shift in policy focus toward increasing the productive capacity of the economy.
Policymakers, he wrote, have taken up a series of reforms which will catalyze an upswing in the private capital expenditure cycle, creating a powerful productivity dynamic, leading to the onset of a virtuous cycle.
A large part of this optimism has stemmed from a drop in commodity prices, especially crude oil. With a 23–37 per cent decline in oil/commodity prices since the March peak, Morgan Stanley expects macro stability indicators to head back toward the comfort zone resulting in India’s Central Bank not having to hike rates aggressively.
Aside from falling commodity prices, the economy’s reopening earlier this year has also aided recovery. According to Morgan Stanley, demand has been increasing as mobility increased and remained above pre-Covid levels in recent months.
Last updated: December 26th, 2025
