Global Apparel Market – An Overview | Watch NOW! | Ad
Home / Knowledge / News / Textiles / Demonetisation to boost tax revenues in long run: Moody's
Demonetisation to boost tax revenues in long run: Moody's
25
Nov '16
Demonetisation of high currency notes in India is likely to boost tax revenues and result into faster fiscal consolidation in the long term, according to a recent report. However, the move could significantly disrupt the economic activity, affect all sectors of the Indian economy to various extents and lead to a weaker growth in the near term.

Moody's Investor Services report titled 'Indian Credit - Demonetisation Is Beneficial for Indian Government and Banks; Implementation Challenges Will Disrupt Economic Activity' also states that demonetisation of Rs 500 and Rs 1,000 currency notes will result in temporarily weaker consumption and GDP growth.

“Although the measures in the near term will pressure GDP growth and thereby government revenues, in the longer term they should boost tax revenues and translate into higher government capital expenditure and/or faster fiscal consolidation,” said Marie Diron, associate managing director in Moody's Sovereign Group.

“Corporates will see economic activity decline, with lower sales volumes and cash flows, with those directly exposed to retail sales most affected,” said Laura Acres, managing director in Moody's Corporate Finance Group.

Businesses and households will experience liquidity shortages due to the cap on withdrawal amount. There will also be a loss of wealth for individuals and corporates with unreported income as some will choose not to deposit their funds to avoid disclosing their sources, says the report.

The study also states that greater formalisation of economic and financial activity would ultimately help broaden the tax base and expand usage of the financial system, which would be credit positive. Implementation challenges will affect corporates by lowering sales volumes and cash flows.

“In the medium term, the impact on the corporates will depend on how quickly liquidity returns to the system and transaction flows are restored. The government could prevent the same amount of cash returning into the system, in an effort to increase the use of non-cash transactions and digital payments,” says the report.

The overall operating environment for doing business in India will improve with the ease and speed at which payments reach manufacturers and reduce corruption, but would prolong the economic disruption.

Consumption in India is still largely cash-driven, and a move towards digital payments would require a likely gradual change in consumer habits, according to the Moody's report. (KD)

Fibre2Fashion News Desk – India


Must ReadView All

Courtesy: Amazon

Apparel/Garments | On 23rd Sep 2018

Consumers in Turkey get access to Amazon

Amazon has launched in Turkey giving customers in the country...

Value in omni-channel retail with Flipkart buying: Walmart

Apparel/Garments | On 23rd Sep 2018

Value in omni-channel retail with Flipkart buying: Walmart

With the acquisition of Flipkart, Walmart sees great value in...

E-com to result in common SE Asian consumer market: BCG

Textiles | On 23rd Sep 2018

E-com to result in common SE Asian consumer market: BCG

The rapid spread of e-commerce and digital technologies is binding...

Interviews View All

Top executives, Textile industry, India

Top executives
Textile industry, India

Such fairs are a must for industry to showcase new innovations

Abhishek Ganguly, Puma India

Abhishek Ganguly
Puma India

‘As a brand, Puma is always looking for new and innovative ways to inspire ...

Marazban F Velati, Sutlej Textiles & Industries limited

Marazban F Velati
Sutlej Textiles & Industries limited

No training can be effective till the candidate believes in it.

Shyam Gupta & Ravi Gupta,

Shyam Gupta & Ravi Gupta

Based out of South Delhi, Gargee Designer's provides bespoke formal and...

Suresh P Bagrecha,

Suresh P Bagrecha

Komal Texfab, founded in 1981, is into manufacturing of knitted fabrics,...

Franco Ravazzi,

Franco Ravazzi

Italy-based Tessimenti E Orditi Tinti (T.O.T SRL) specialises in stocking...

Ashok Desai, Bombay Textile Research Association

Ashok Desai
Bombay Textile Research Association

Bombay Textile Research Association (BTRA) is a leading name in textile...

Johan Berlin, Investkonsult Sweden AB

Johan Berlin
Investkonsult Sweden AB

Investkonsult Sweden AB are consultants in the nonwoven and absorbent...

Kazuaki Yazawa, Purdue University

Kazuaki Yazawa
Purdue University

Scientist <b>Kazuaki Yazawa</b> has developed thermoelectric semiconductor ...

Tony Ward, Tony Ward

Tony Ward
Tony Ward

"You have to truly understand what your client wants, know her needs, what ...

Divvya and Nidhhi Gambhir, Walnut

Divvya and Nidhhi Gambhir
Walnut

<b>Divvya and Nidhhi Gambhir</b> started their career with the launch of...

Sonam & Paras Modi, SVA

Sonam & Paras Modi
SVA

Sonam and Paras Modi's Sva Couture is synonymous with head-turning...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

Leave your Comments


September 2018

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Advanced Search