India: First round of fiscal stimulus – Standard Chartered

India’s finance minister today announced support for the disadvantaged segments of society likely to suffer the most from the three-week lockdown, economists at Sntdard Chartered bank brief. USD/INR trades at 75.0915.

Key quotes

“We estimate that the announced package size of INR 1.7tn (0.85% of GDP) includes fresh expenditure allocation of close to 0.5-0.6% of GDP.”

“We see a risk that the central government’s FY21 fiscal deficit will be at least 1.5-2.0ppt wider than the targeted 3.5% of GDP.”

“Focus will now shift to the Reserve Bank of India (RBI). We expect a 50bps repo rate cut to 4.65% to be delivered before or at the 3 April meeting.”