International Monetary Fund headquarters, Washington, DC. Photo: Reuters
International Monetary Fund headquarters, Washington, DC. Photo: Reuters

The International Monetary Fund sees medium-term benefits in India’s demonetization of high-value currency in November 2016 and believes the pain caused by the move is wearing off.

At a fortnightly news conference, IMF official William Murray said the Fund saw “salutary benefits” and “potential benefits” going forward,  Press Trust of India reports.

He said demonetization did cause some temporary disruptions in economic activity, primarily in private consumption and small businesses, due to cash shortages, “but the effects are dissipating.”

The IMF is scheduled to come out with an update of its projections of India’s economic growth rate along with those of the rest of the world next month.

Credit Suisse sees weak growth

Earlier, Swiss brokerage Credit Suisse expressed confidence about India’s macroeconomic parameters and said the economy should improve somewhat during 2018. However, the current consensus on the strength of the country’s economic growth next year is likely too optimistic, it added.

According to Neelkanth Mishra, managing director and India equity strategist at Credit Suisse, “Structural reforms such as the goods and services tax, the Insolvency and Bankruptcy Code and the setting up of real-estate regulators in states, while structurally positive, have introduced significant uncertainty around growth, fiscal deficits, inflation, interest rates and banking-system health.”