The Organisation for Economic Co-operation and Development (OECD), in its Economic Survey for India released on Tuesday, has said that the Indian government’s move to demonetise high-value currency notes will have long-term benefits for the country’s economy.
The report says demonetisation has complemented the many initiatives recently taken by the government to fight against black money and the move will also limit tax evasion.
"Implementing the demonetisation has had transitory and short-term costs but should have long-term benefits," the report said.
“The shift towards a less cash economy and formalisation should however improve the financing of the economy and availability of loans and should promote tax compliance,” it added.
OECD secretary general Angel Gurría said that “India provides a welcome counter-point to a global economy” that has not been performing well in the recent past. He also stressed on the need for further reforms to maintain the pace of economic development in the country.
“Reforms are historic and are bearing fruit, growth is strong and other macroeconomic indicators are improving. Maintaining the reform momentum will be critical to boosting investment and creating quality jobs needed to ensure strong and inclusive growth for future generations, with all segments of society benefitting from it,” he added.
In its report, OECD estimates India's GDP growth to be at 7 per cent for current fiscal, 7.3 per cent in FY18 and 7.7 per cent in FY19.