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You cannot downgrade the storage size of your PostgreSQL database on Azure. Once the storage size is increased, it cannot be reduced. To achieve a smaller storage size, you would need to create a new Azure Database for PostgreSQL flexible server instance with the desired storage size and then perform a manual dump and restore operation to migrate your databases.
For more details, you can refer to the Limits in Azure Database for PostgreSQL flexible server and the steps to scale storage
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Deepanshu