Scars of demonetisation are more visible with time: Dr Manmohan Singh

Cornelia Mascio
Novembre 8, 2018

The chief minister said she had been describing it as a "dark day" since demonetisation was announced by Prime Minister Narendra Modi in 2016. On the 2nd anniversary of demonetisation drive, Arun Jaitley penned a Facebook blog in which he said the economic decision was a key step in a chain of important decisions taken by the government to formalise the Indian economy. "Notebandi impacted every single person, regardless of age, gender, religion, occupation or creed" he said.

"Beyond the steep drop in headline GDP growth numbers after demonetisation, the deeper ramifications of notebandi are still unraveling". Small and medium businesses that are the cornerstone of India's economy are yet to recover from the demonetisation shock.

In a Facebook post, the Union Finance Minister wrote, "An ill-informed criticism of the demonetisation is that nearly the entire cash money got deposited in the banks".

He added, "It is often said that time is a great healer. This has had a direct impact on employment as the economy continues to struggle to create enough new jobs for our youth". I urge the government to restore certainty and visibility in economic policies. The financial markets are volatile as the liquidity crisis wrought by demonetisation is taking its eventual toll on infrastructure lenders and non-bank financial services firms. Apart from that, the impact of Demonetisation has been felt on the collection of personal income tax and its collections were higher in Financial Year 2018-19 (till 31-10-2018) compared to the previous year by 20.2%, the finance minister said. "With a depreciating currency and rising global oil prices, macro-economic headwinds are also starting to blow now", he said.

It is therefore prudent to not resort to further unorthodox, short-term economic measures that can cause any more uncertainty in the economy and financial markets.

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