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Researchers at Standard Chartered have trimmed their Indian GDP growth forecast in a study underpinned by a subdued pickup in economic activity and limited demand boost in the budget.

Key Quotes

“We lower our FY20 (year ending March 2020) and FY21 GDP growth forecasts to 5.0% and 5.6%, from 5.3% and 6.3%, respectively. The move is driven primarily by weaker-than-expected growth momentum in Q3-FY20 and a likely tepid recovery in Q4-FY20, and limited measures to boost demand announced in the recent FY21 budget.”

“The recently announced budget did attempt to boost growth via an income tax cut for individuals with income up to INR 1.5mn and announcing double-digit expenditure increases for both FY20 and FY21.”

“The impact of the recent outbreak of novel coronavirus on the economy is difficult to estimate. However, given China’s increased integration into the global economy relative to the SARS outbreak in 2003, an adverse impact on India’s GDP growth in Q4-FY20 seems inevitable.” 

“According to the Reserve Bank of India estimates, a 50bps change in global growth impacts Indian growth by 20bps.”