Swiss brokerage UBS has lowered the country's real GDP growth forecast to 6.7 percent from 6.9 percent earlier in FY20 citing the continuing slowdown in consumption demand and warned that a revival is unlikely before FY21.

The brokerage expects the Reserve Bank to ease the policy rate by another 75 basis points as against its previous forecast 25 basis points in FY20.

"We expect real GDP growth to remain sluggish in FY20 as well after slowing to a five-year low of 6.8 percent in FY19. We are lowering our FY20 forecast further to 6.7 from 6.9 percent," UBS India economist Tanvee Gupta Jain, said in the report Wednesday.

According to the report, growth momentum will remain subdued until September as "the consumption slowdown is underway and real fixed capex growth will take some more time to recover."

Since FY13, growth has mostly been driven by consumption as investments remained muted. Household demand consistently exceeded personal disposable income growth and was being funded through falling household savings and higher leverage, constraining the potential growth, it said.

"Household savings have reached a trough and the tightening in financial conditions (led by NBFCs) is hurting leveraged consumption," the report said, adding any meaningful pickup in private capex is also unlikely before FY21.

The report said there is very little fiscal headroom to stimulate economic growth.

The lack of fiscal impetus in the budget opens the door for higher monetary easing than market expectations.

"Slowing growth (negative output gap) and benign inflation (3.6 percent average FY20) will allow the monetary policy committee to cut rates by a further 75 basis points, bringing the cumulative easing to 150 bps in this cycle," the report.