New Delhi, Dec 2 (PTI) Finance Minister Arun Jaitley today said demonetisation may impact growth "for a quarter or so" but this disruption will not last too long and the move along with GST will help create a larger and cleaner economy.

"I have least doubt in my mind that (one year from now) you will have a bigger economy, higher GDP, cleaner GDP. You will have a higher tax base and more money in banks, and probably interest rates will be more reasonable. Therefore, all these collectively could contribute a lot as far as GDP is concerned," he said at the HT Leadership Summit.

Both the economy and social system will see a major transformation after the implementation of the Goods and Services Tax (GST) post demonetisation.

"I personally believe that once the remonetisation process is complete and the GST is implemented, it's going to hugely impact India's businesses and also the Indian way of life.

"You will have more of digitised expenditures, you will have a taxation system far more efficient, which is extremely difficult to evade, where each limb of the transaction is being captured," he said.

As far as the negative impact of demonetisation is concerned, Jaitley said, "When you switch over, it creates disruption. I don't see disruption lasting too long. You may see the impact for a quarter or so. Then when you look at next 12-15 quarters, it's certainly going to benefit."

Citing a few economic trends post demonetisation, the Minister said rabi sowing this season has been higher than last year, while auto sales were a mixed bag.

"Of course, you will have some disruption created because of the switchover, in the long run, advantages are going to be huge as far as the relative cost of disruption is concerned," Jaitley said.

Speaking about the various advantages of the demonetisation, the Finance Minister said, it could lead to reduction in interest rates.

"Rates will now hopefully at some stage come down. With more money in the taxation system, our base itself increases," he said.

As far as inflow from demonetisation is concerned, he said it would come from many sources including higher tax penalty to be levied on unaccounted money.

Demonetisation and GST expand the formal tax base and digitise transactions, aiming to reduce tax evasion and boost growth. Demonetisation and GST are described as coordinated measures to enlarge the formal tax base, promote digitised expenditures, improve transaction traceability, reduce tax evasion, and bring more funds into the banking system; penalties on unaccounted money are identified as an additional inflow. Short-term disruption from currency withdrawal is acknowledged (about a quarter), but medium- to long-term benefits include potential lower interest rates, higher GDP, and structural changes in business and social practices following GST implementation.