India is on track to become the world’s fourth largest economy in 2022, the International Monetary Fund said, with the economy overcoming any hiccups caused by last year’s demonetization campaign.

“Ranking countries and regions on their gross domestic product for 2017 and 2022 based on IMF forecasts, India, growing at 9.9 percent a year in nominal terms, will surpass Germany by 2022 as the world’s fourth largest economy, with the UK dropping out of the top five after 2017,” the IMF report said.

The IMF report appears to back a World Bank report – Global Economic Prospects – released in early January, which estimated that India’s GDP growth will scale back from 7.6 per cent to 7 per cent in 2017 as a direct result of the demonetization policy released in Q4 2016.

However, the World Bank report classified India’s economy as “still robust” and forecast that GDP growth would bounce back in coming years to regain its momentum, with growth rising to 7.6 per cent in 2018 and strengthening to 7.8 per cent in 2019.

The IMF said last week that India would need to avoid such moves as Prime Minister Narendra Modi’s demonetization drive and instead focus on driving employment and private sector investment growth.

Economists agree that there would also need to be reform in labour, and land laws as well as the introduction of a Goods and Services Tax (GST) to complement liquidity expansion in the banking system.

The GST is to be implemented in India as of July 1; the IMF says this would go a long way to ensure that India’s medium-term growth jumps to above eight per cent a year.