The government's move to demonetize Rs 500 and Rs 1,000 bank notes from the economy on November 8, has caused "unwarranted damage to the economy," India Ratings said in a recent report. The subsequent damage caused to the economy has even led the ratings' agency to lower their GDP estimate for FY17. This constitutes a mere 12% of the black economy in India, leaving 88% of the black money to remain in the system. While the move was to eradicate black money and stem terror funding, its execution has led to chaos across the country and tight liquidity with the people. Therefore, Ind-Ra expects private final consumption expenditure (PFCE) to now grow at 7.5% in FY17, 89 bps lower than its earlier projection.

Source: dna December 04, 2016 07:04 UTC