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In its latest client note published on Tuesday, Upasana Chachra, Economist at Morgan Stanley India, made a downward revision to the FY 2020 Indian GDP growth forecasts by 20bps amid policy handicap and ongoing trade tensions.

Key Quotes:

“Delays in policy transmission are affecting the domestic demand outlook, and continued trade tensions are weakening the external demand outlook.

FY20 GDP growth target reduced to 6.3% from 6.5% and for FY21 to 6.8% from 7.2%.

As such, continued weakness in incoming growth data and delay in policy measures to fix the risk aversion in the financial sector are bringing downside to the domestic demand outlook in the near term.

We believe fiscal policy has limited wriggle room, especially in the near term, to provide a boost. We cite the elevated level of augmented deficit.”

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