The government’s decision to scrap old Rs 500 and Rs 1,000 notes, in an attempt to fight corruption and black money, will have a profound and positive impact on India’s economy, World Bank CEO Kristalina Georgoieva has said.
In an interview to Hindustan Times, Georgieva said that demonetisation may have caused inconvenience and hardship to people, but in the long run, it will help foster a clean and digitised economy.
“What India has done will be studied (by other countries). There hasn’t been such demonetisation in a country so big,” she was quoted as saying by Hindustan Times.
The World Bank CEO’s appreciation for Prime Minister Narendra Modi’s November 8 announcement comes after International Monetary Fund (IMF) said that it supported India’s efforts to fight corruption through currency control measures, which have since eased.
Georgieva compared PM Modi’s decision to that of the European Union, which is also phasing out high denomination bills but over a longer period of time.
“While demonetisation has, in the short term, created some impact on businesses dependent on cash, in the long term the impact will be positive… The reforms India is targeting are profound,” she said.
She said that the government’s push towards cashless economy through digital payments and direct transfer of subsidies along with note ban will help the poor.
During her two-day visit to India, Georgieva travelled on a local train in Mumbai and visited the world’s biggest slum in Dharavi. She said that people in India were eager to get a better life and that they were ready to pay more for improved services.
“India is the bright spot in today’s global economy and it is visible in the country’s performance and more so in the aspirations of the people here,” she said.
“Our growth projection for India for this year is 7 per cent. The signs are positive with the reform process underway and GST expected to be implemented soon,” Georgieva added.