New Delhi, Jan 31 (IANS): The Economic Survey 2016-17 has advocated fast remonetisation, a cut in tax rates and stamp duties and reining in over-zealous tax administration to make India the world's fastest growing major economy again.

The survey, tabled in Parliament by Finance Minister Arun Jaitley, said demonetisation has had short-term costs but holds the potential for long-term benefits. But it would require follow-up actions to minimise the costs and maximise the benefits.

"These actions would allow growth to return to trend in 2017-18, possibly making it the fastest-growing major economy in the world, following a temporary dip in 2016-17," the survey stated.

The survey said 2016-17 was marked by two major domestic policy developments - the passage of the Constitutional Amendment, paving the way for implementing the Goods and Services Tax (GST), and the action to demonetise the two highest denomination notes.

"The GST will create a common Indian market, improve tax compliance and governance, and boost investment and growth; it is also a bold new experiment in the governance of India's cooperative federalism," the survey added.

The survey also stated that the year also saw a number of legislative accomplishments in the country, that included the government overhauling the bankruptcy laws so that the "exit" problem that pervades the Indian economy can be addressed effectively and expeditiously.

Besides this, the government also codified the institutional arrangements on monetary policy with the Reserve Bank of India and solidified the legal basis for Aadhaar, to realise the long-term gains from the Jan Dhan-Aadhaar-Mobile trifecta.

The survey stated the major short term macro-economic challenge is to re-establish private investment and exports as the major drivers of growth and reduce reliance on government and private consumption. 

"Addressing the twin balance-sheet problem - over-indebted corporates and bad-loan-encumbered public sector banks - a legacy of the years surrounding the global financial crisis will be vital," it said.

The survey said for future growth societal shifts at the level of ideas and narratives will be needed to overcome three long-standing meta-challenges - inefficient redistribution, ambivalence about the private sector and property rights, and improving but still-challenged state capacity.