Global ratings agency Fitch on Tuesday raised the forecast for India’s GDP growth in the current financial year 2016-17 to 7.1% from 6.9% earlier, after the government’s official data showed there was hardly any impact on the economy from Demonetization of high value currency notes. However, Fitch warned of possible revisions to official GDP data later on, as it said that the initial impact of demonetisation on the economy may be underestimated.
“Fitch now expects Indian GDP to grow by 7.1% for FY16-17, before picking up to 7.7% in both FY17-18 and FY18-19,” Fitch Ratings said.
Earlier in November, Fitch had cut the forecast for India’s current financial year GDP growth to 6.9% from 7.4% citing the impact of demonetization, which left the nation under a severe cash crunch with 86% of the currency pulled out of circulation all of a sudden.
“According to official statistics, GDP was hardly hit in 4Q16 by the cash crunch, after the government’s move to pull 86% of currency in circulation out of the economy overnight,” Fitch said in a note.