The likely extension of the RBI’s debt moratorium will help smooth near-term cash flow issues for firms and households but, in the absence of additional financial support from the government, this won’t be enough to prevent an eventual surge in non-performing loans. Meanwhile, reports that India and the US are close to a new trade deal don’t change the macro outlook. But in the context of India’s deteriorating relationship with China, it might signal a willingness from India to draw closer to the US, and possibly Asia’s other democracies.
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