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IMF sees benefits in the medium-term from the demonetization

15 Dec 2017 Evaluate

The International Monetary Fund (IMF), which is slated to come out with an update of its projections of India’s growth rate along with the rest of the world in January, sees benefits in the medium-term from the demonetisation exercise which India carried out about a year ago.

William Murray of the IMF said “We see salutary benefits from the demonetisation that took place a year ago. And there are potential benefits going forward.” He added that the demonetisation did cause some temporary disruptions in economic activity, primarily, private consumption and small businesses due to cash shortages but the effects are dissipating.

He further said that in the medium term, demonetisation could have possible effects, including through greater formalisation of and the information on economic activities and a more efficient payment system with a greater use of the banking system and digital payments.

The multilateral agency though had recently lowered India’s economic growth for 2017 and 2018 in its 'World Economic Outlook report' citing lingering impact of demonetisation and the Goods and Services Tax and projected India to grow at 6.7% in 2017 and 7.4% in 2018, 0.5 and 0.3 percentage points less than the projections earlier this year, respectively. 

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