Demonetisation impact will stay for next six months: Kaushik Basu

Noted economist Kaushik Basu on Friday said that he expects the impact of demonetisation to stay for the next six months.

Basu, who was Chief Economist of the World Bank and Chief Economic Adviser to the government, said this in an interview to channel ET Now.

According to Basu, the demonetisation of high-value currency in November gave the economy a shock, but luckily a temporary one.

Basu said the recent decision of the Reserve Bank of India (RBI) to reduce key lending rates by 25 basis points will be enough to move private investment.

He said the RBI is worrying slightly more about inflation than it should.

On the GST, the noted economist said the new indirect tax regime is facing teething troubles. However, investors have taken it positively. He pointed out that it will remove dual taxation and reduce cost of logistics.

Basu said that India's growth could bounce back to 8.5 per cent in the next one and a half years.

He added that the country has a positive image abroad and that India will be able to capitalise on it.

--IANS

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