Demonetisation caused some temporary disruptions in India’s economic activity due to cash shortages, but the effects are dissipating, the International Monetary Fund has said.
“We see salutary benefits from the demonetisation that took place a year ago. And there are potential benefits going forward,” William Murray, Deputy Spokesman, IMF Communications Department, told reporters.
Murray said 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 said in response to a question.
“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,” Murry said.
The Indian government had on November 8 last year decided to scrap of all Rs 500 and 1,000 banknotes in an effort to curb black money and corruption. The IMF 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.