India: Lower oil prices to have an impact – Standard Chartered

Economists at Standard Chartered Bank update their forecast for the Indian economy following lower crude oil prices. USD/INR is trading at 74.352.

Key quotes

“We lower our CPI inflation forecast for FY21 (ends March 2021) to 3.5% from 3.8% on expectations of lower crude oil prices and slower growth.”

“We now expect a cumulative 50bps of repo rate cuts to 4.65% in FY21 versus our previous expectation of cumulative 40bps cuts. We expect the cuts to be split equally between the April and June policy meetings.” 

“We revise our FY21 C/A deficit forecast to 0.4% of GDP from 1.3% on our assumption of lower crude oil prices.”

“Lower crude oil prices will likely result in a revenue gain equivalent to 0.4% of GDP for the central government, but this unlikely to provide space for another round of fiscal stimulus.”