L&T's Sikka believes worst of demonetisation behind us

Rahul Sikka, Larsen and Toubro's Vice President and Head Africa Power Transmission and Distribution, has said Prime Minister Narendra Modi's move to demonetise high-denomination currency notes of Rs. 500 and Rs. 1,000 has brought more people into the periphery of tax-related activities.

Sikka said demonetisation was essential.

"I believe that the worst is past and the latest I have heard is that the limit is now 50,000 rupees a week which is already substantial. There will be benefits for sure. And you bring so many more millions of people into the tax equation, you automatically create a healthy environment. It was missing, it is there now," he said.

Sikka, however, added that it was his personal opinion.

Sikka's comment came even as the International Monetary Fund (IMF) said that India's projected growth will be around 6.6 per cent in fiscal 2016-17 due to what it called "temporary disruptions" caused by demonetisation.

Releasing its annual country report here, the IMF, however, said the negative impact of demonetisation on the Indian economy would not last for long, and that the country has the potential to enjoy growth of more than eight per cent within the next few years.

It also said that demonetisation has affected both consumption patterns and business activity, this creating a new challenge for the Narendra Modi-led government to sustain growth momentum.

Growth is projected to slow to 6.6 per cent in FY2016/17, then rebound to 7.2 per cent in FY2017/18, due to temporary disruptions, primarily to private consumption, caused by cash shortages," the IMF says in the report.

In fiscal 2015-16, the Indian economy grew at 7.6 per cent.