President Pranab Mukherjee on Wednesday said demonetisation may have hit economic activity, but its effect was temporary and the larger benefit will come in the form of transparency in the system and fighting graft.
"Demonetisation while immobilising black money and fighting corruption may have led to temporary slowdown of economic activity. As more and more transactions become cashless, it will improve the transparency of the economy," he told the nation on the eve of the 68th Republic Day.
In the televised address, Mukherjee said domestic industry must improve its competitiveness by focusing on quality, productivity and efficiency. He also said a 10-per cent sustained growth was imperaive to wipe out poverty.
He said the Indian economy was doing well and showing signs of recovery despite the challenges of the global economy -- growing at 7.2 per cent during the first half of this fiscal, which was the same as last year.
"We are firmly on the path of fiscal consolidation and our inflation level is within the comfort zone. Though our exports are yet to pick up we have managed a stable external sector with sizeable foreign exchange reserves," he said.
"We have to work harder to provide enhanced employment opportunities to our youth through the creation of world-class manufacturing and services sectors. The competitiveness of the domestic industry has to be improved by focusing on quality, productivity and efficiency.
The president said the various initiatives of the government had been promoting the well-being of the people. Among them, he specifically listed Aadhaar, which was plugging leakages in reaching government schemes to 110 crore people in a transparent manner.
He said the Digital India programme was creating a knowledge economy and a digital infrastructure to promote cashless transactions, while Start-up India and the Innovation Mission were fostering new-age entrepreneurship.
The Skill India initiative targets 300 million youth by 2022.
Mukherjee said as the nation enters its 68th year as a republic, one has to work harder since the war on poverty is not yet over. "Our economy is yet to grow at over 10 percent for an extended period of time to make a significant dent on poverty," he said.
The president lamented that one-fifth of India's still remained below poverty line.
"We have to work harder to provide food security to our people and to make the agriculture sector resilient to the vagaries of nature. We have to provide better amenities and opportunities to our people in villages to ensure a decent quality of life."