India may see 6.6 per cent GVA rise

Mumbai: India’s gross value added (GVA) growth is likely to be at 6.6 per cent in 2016-17 as economic activity will take more time to normalise following the government’s move to demonetise high-value notes, Icra has said.

“Although the currency liquidity is likely to improve significantly by the end of January 2017, economic activity may take longer to normalise, based on which we have revised our forecast for GVA growth in 2016-17 to 6.6 per cent,” the domestic rating agency said in a report.

It said the pace of revival of economic activity in the fourth quarter of the current financial year is likely to take a cue from how quickly currency in circulation gets replenished and digital transactions become more widespread.

Between November 10 and December 19, banknotes of Rs 5.9 trillion were issued to the public through the banking system, as indicated by the Reserve Bank of India, equivalent to an estimated 38 per cent of the value of currency that ceased to be legal tender.

If this pace of release of cash is maintained and the proportion of fresh notes in different denominations remains the same, currency liquidity is likely to improve considerably by the end of January 2017, prior to the presentation of the Budget.