As per the latest economic outlook on India by the International Monetary Fund, the liquidity crunch caused by the government's demonetisation drive has cost India the mantle of world’s fastest-growing large economy in 2016.
IMF said that the slowdown effect caused by high-value currency pullout was temporary in nature and Indian economy would witness a spurt in their economic growth in 2017.
India’s economic growth slipped to 6.6 percent last year from 7.6% in 2015, according to the fund’s latest World Economic Outlook, which estimates that China’s economy grew by 6.7% in 2016. The fund expects India’s growth to bounce back to 7.2% this year and accelerate to 7.7% in 2018. China, meanwhile, is projected to continue decelerating, to 6.5% in 2017 and 6.0% in 2018.
The IMF said it trimmed its 2016 forecast for India by one percentage point “primarily” because consumers tightened their purse-strings after November’s currency invalidation.