Terming demonetisation as "bold and decisive" measure, Finance Minister Arun Jaitley on Wednesday said it will have a multiplier effect on the economy and will create bigger, cleaner and real GDP.

"We are moving from informal to formal economy and the government is now seen as a trusted custodian of public money," he said while delivering the Union Budget 2017-18. Demonetisation was a bold and decisive strike in a series of measures to arrive at a new normal of bigger, cleaner and real GDP, he said, adding that it has only a transient impact on economy and the long term benefit include higher GDP growth and tax revenue.

Finance Minister Arun Jaitley (C) stands outside his office at North Block holding the briefcase containing the Union budget for 2017 and is flanked by MoS Arjun Meghwal (R) and Santosh Gangwar (L), on Wednesday | Source: PTI

On November 8, 2016, the government had announced demonetisation of old Rs 500 and Rs 1000 notes to crack down on black money and move towards a 'less cash' society through digital payments. Jaitley said the government has taken a series of measures to eliminate black money and curb corruption and demonetisation was a step in that direction.

Demonetisation will help in the transfer of resources from tax evaders to the government, he said. He further said that the pace of remonetisation has picked up and the situation will soon normalise. Expressing hope that there will be no spillover effect of demonetisation next fiscal, the Finance Minister said the surplus liquidity in banks will lower the borrowing and the lending rates. The government would continue with the economic reforms for benefit of poor, he added.