ZEE Business
ZEE BUSINESS
Live TV
Live TV
  • India
    • Economy
    • Politics
    • Markets
  • World
    • Economy
    • Politics
    • Markets
  • Companies
    • Auto
    • Banking & Financial Services
    • Pharma
    • Energy
    • Infrastructure
    • Media
    • IT
    • Telecom
    • Consumer Products
    • Aviation
    • FMCG
  • Market
    • Mutual Funds
    • Commodity
  • Personal Finance
    • Income Tax Calculator
    • Personal Loan Calculator
    • Car Loan Calculator
    • Home Loan Calculator
  • Technology
  • Automobile
    • Cars
    • Bikes
  • Small Business
    • SME
    • Startups
  • videos
  • photos
  • Authors
  • More ...
    • VIDEOS
    • PHOTOS
    • AUTHORS
Home » India News

Notes Ban: Fitch cuts India's FY17 growth forecast to 6.9%

  • Twitter
  • Facebook
  • GPlus
Notes Ban: Fitch cuts India's FY17 growth forecast to 6.9%
Fitch said it expects RBI's 1.50% policy rate cuts since the beginning of 2015 to feed through to higher GDP growth, even though monetary transmission has been impaired by relatively weak banking sector health. Image Source: Reuters
By PTI
Updated: Tue, Nov 29, 2016
02:45 pm
New Delhi , PTI
RELATED NEWS
Demonetisation: A timeline of flip-flops since November 8 Demonetisation: A timeline of flip-flops since November 8
Will PM Modi's demonetisation plan backfire? Will PM Modi's demonetisation plan backfire?
India's GDP growth likely picked up in July-Sept but demonetisation to dent future growth: Reuters poll India's GDP growth likely picked up in July-Sept but demonetisation to dent future growth: Reuters poll
Here are 9 things Urjit Patel said on demonetisation Here are 9 things Urjit Patel said on demonetisation
Black money crackdown: Rs 500, 1000 demonetisation causes useless panic Black money crackdown: Rs 500, 1000 demonetisation causes useless panic

Fitch Ratings on Tuesday lowered India's gross domestic product (GDP) growth forecast for the current fiscal to 6.9% from 7.4%, saying there will be "temporary disruptions" to economic activity post demonetisation.

It said economic activity will be hit in the October-December quarter because of the cash crunch created by withdrawal and replacement of Rs 500 and Rs 1,000 notes that accounted for 86% of the value of currency in circulation.

"Indian growth has also been revised down to reflect temporary disruptions to activity related to the Reserve Bank of India's (RBI) surprise demonetisation of large-denomination bank notes," Fitch said, as it revised real GDP growth forecast down to 6.9% for 2016-17, from 7.4% projected earlier.

The US-based ratings agency also revised GDP growth forecast for 2017-18 and 2018-19 lower to 7.7% from 8% earlier.

"Gradual implementation of the structural reform agenda is expected to contribute to higher growth, as will higher real disposable income, supported by an almost 24% hike in civil servants' wages.

"But the anticipated recovery in investment looks a bit less certain in light of ongoing weakness in the data," Fitch said in its 'Global Economic Outlook - November' report.

ALSO READ: Demonetisation: A timeline of flip-flops since November 8

Regarding currency ban, it said consumers do not have the cash needed to complete purchases, and there have been reports of supply chains being disrupted and farmers unable to buy seeds and fertiliser for the sowing season.

"Time spent queueing in banks is also likely to have affected general productivity. The impact on GDP growth will increase the longer the disruption continues," Fitch said, adding the medium-term effect of the currency withdrawal on GDP growth is uncertain, but is unlikely to be large.

"Most importantly, demonetisation is a one-off event. People who operate in the informal sector will still be able to use the new high-denomination bills and other options (such as gold) to store their wealth," it added.

Fitch said there are no new incentives for people to avoid cash transactions and the informal sector could soon go back to business as usual.

Post the demonetisation announcement on November 8, the government and banks have been taking several steps to push digital transactions.

Fitch said it expects RBI's 1.50% policy rate cuts since the beginning of 2015 to feed through to higher GDP growth, even though monetary transmission has been impaired by relatively weak banking sector health.

"A surge in low-cost funding due to the demonetisation may remove a constraint on banks that prevented lending rates from keeping pace with the RBI's policy rate cuts in recent years, although this will depend on deposits remaining in banks beyond the next few months," it said. 

ALSO READ: Demonetisation impact: India's manufacturing output may take a hit

TAGS:
Growth forecastEconomycash crunchRate CutRBIGDPDemonetisation
Next Article

NEXT STORY: Direct tax collection will get a long-term boost, Franklin Templeton says

RELATED NEWS
Demonetisation: A timeline of flip-flops since November 8 Demonetisation: A timeline of flip-flops since November 8
Will PM Modi's demonetisation plan backfire? Will PM Modi's demonetisation plan backfire?
India's GDP growth likely picked up in July-Sept but demonetisation to dent future growth: Reuters poll India's GDP growth likely picked up in July-Sept but demonetisation to dent future growth: Reuters poll
Here are 9 things Urjit Patel said on demonetisation Here are 9 things Urjit Patel said on demonetisation
Black money crackdown: Rs 500, 1000 demonetisation causes useless panic Black money crackdown: Rs 500, 1000 demonetisation causes useless panic

LATEST NEWS

Railway jobs 2018: This change makes Shashi Tharoor thank Piyush Goyal

West Bengal panchayat elections 2018: Unprecedented judgement! Nomination by WhatsApp should be filed, says HC

How to make more money: Your wealthsmith suggests 5 point focus

Rs 10,000 turned into Rs 39 lakh; this super mutibagger surged 38,000%, should you buy?

7th Pay Commission: Surprise! These government servants get over 20% pay hike; implementation immediate

AP EAMCET 2018 answer keys: Download at sche.ap.gov.in today; check response sheet and how to raise objection

CISCE Result 2018: ICSE 10th, ISC 12th Results 2018 to be declared in May at cisce.org; all you want to know here

Karnataka assembly elections 2018: Siddaramaiah not to be Congress CM face? Find out

Chevron evacuates Venezuela executives following staff arrests

RBSE result 2018 date: Rajasthan Board class 10, class 12 to be declared on www.rajeduboard.rajasthan.gov.in in May

  • India News
  • World News
  • Companies News
  • Market News
  • Personal Finance News
  • Technology News
  • Automobile News
  • Small Business News
  • Income Tax Calculator
  • Live TV
  • Videos
  • Photos
  • Author
  • Rss Feed
  • Contact Us
  • Privacy Policy
  • Legal Disclaimer

Latest Trending Updates

  • Amazon Prime Day
  • Income Tax
  • Bharti Airtel
  • NPA
  • Home Loan

Trending Topics

  • Farm Loans
  • 7th Pay Commission
  • Sanitary Pads
  • National Stock Exchange
  • GST

Follow us on

zeebiz
zeebiz
zeebiz

Partner Sites

  • Zee News
  • Hindi News
  • Marathi News
  • Bengali News
  • Tamil News
  • Malayalam News
  • DNA
  • WION
Copyright © Zee Media Corporation Ltd. All rights reserved