India Ratings has lowered the growth forecast for the current fiscal to 6.7 per cent from 7.4 per cent estimated earlier, citing 'disruption in economy' on account of demonetisation and GST implementation.
The rating agency said the failure to quickly remonetise the economy has proved fatal for the small and unorganised sector which were heavily dependent on cash.
Yesterday, ADB has trimmed India's growth projection for the current fiscal to 7 per cent from 7.4 per cent previously projected.
"The combined effect of demonetisation and introduction of goods and services tax (GST) is proving to be more disruptive for the economy than was expected earlier.
"It is unlikely to meet the agency's earlier projection of 7.4 per cent and will come down to 6.7 per cent during 2017-18," the rating agency said in a statement.
Without getting into the objective of demonetisation, Ind-Ra said, "Sucking out the high denomination currency while failing to remonetise the economy quickly has in many cases proved fatal for the unorganised sector/small and medium enterprise where business transactions are heavily cash dependent."
Citing reports of the union government planning a stimulus package, the rating agency said that the availability of fiscal space with the government is questionable.
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