A Moody’s sign is displayed on the company’s corporate headquarters in New York (REUTERS)
New Delhi: Moody’s Investors Service, the US-based rating agency expects that the full impact of demonetisation will reflect in the fourth quarter numbers.
Speaking to CNBC-TV18, William Foster of Moody’s said that he expects Q4 GDP to moderate to 6.4 percent.
He said that demonetisation will be a positive for India over the medium-term and its impact will eventually fade away.
Also Read: Demonetisation to Cut Tax Avoidance, Corruption; Credit Positive: Moody’s
However, the agency projected the growth to slow to 6.4 per cent in the January-March quarter, from 7 per cent in the previous three months.
“Looking ahead, we expect remonetisation to continue at a similar pace,” Moody’s said in its report on demonetisation.
He further said that estimate that 60% of notes have been remonetized although demonetisation had a big impact on financial services and real estate.
“We continue to believe that in the medium term demonetisation will strengthen India’s institutional framework by reducing tax avoidance and corruption. It should also result in efficiency gains through greater formalisation of economic and financial activity, which would help broaden the tax base and expand usage of the financial system.”
“All this would be credit positive for the sovereign,” it added.