The International Monetary Fund (IMF) has said that Indian economy is on its path to recovering from the negative impact of demonetisation and disruption caused by roll out of goods and services tax (GST). It further pointed out that in recent years, India’s economy has expanded strongly, due to macroeconomic policies that emphasise stability and efforts to tackle supply-side bottlenecks and structural reforms. It added that disruptions from note ban and the rollout of GST did slow growth.
As cash transactions dominated India’s economic activity, IMF stated that it was inevitable that demonetisation would temporarily affect economic activity. It also said that the rollout of the GST was a landmark accomplishment that can be expected to enhance efficiency of intra-Indian movement of goods and services, create a common national market, enhance tax buoyancy, and boost GDP growth and job creation.
However, IMF highlighted that with the economy growing by 7.2% in the October-December quarter of 2017-18, India has regained the status of the world's fastest-growing major economy. Calling this development a welcome change, it said that the growth prospects remain optimistic. Adding further, it said that the Indian economy would benefit from further reforms, such as enhancing health and education, encouraging private and public investment, and improving the efficiency of the banking and financial system. It noted that this would support durable and inclusive growth and enable India to move toward the income levels of wealthier countries.