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Indian Economy To Pick Up Once Demonetization Impact Fades: IMF

By Religare

The International Monetary Fund (IMF) has said that India's economic growth is expected to pick up once the effects of cash shortages linked to the currency exchange initiative fade.

Indian Economy To Pick Up Once Demonetization Impact Fades: IMF
Prime Minister Narendra Modi on November 8 had announced scrapping of old Rs 500 and Rs 1000 notes, pulling out 86 per cent of the total currency in circulation.

Commenting on the issue, the IMF in its note titled 'Global Prospects and Policy Challenges' said, "Further subsidy reduction and tax reforms, including a robust design and full implementation of the Goods and Services Tax (GST), are necessary to attain medium-term fiscal consolidation plans."

It further observed that in some emerging economies like China and India reducing excessive corporate leverage and improving bank's balance sheets or adopting more prudent risk-management practices, including to reduce currency and maturity balance sheet mismatches, will help reduce vulnerabilities to global financial conditions, possible capital outflows, and sharp currency movements.

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