Rajat Sharma

Demonetisation strategy is moving in the right direction

Circulation of currency notes in India is to the tune of nearly Rs 16.5 lakh crore, out of which Rs 500 and Rs 1000 legal tenders that were withdrawn on Nov 8, were to the tune of nearly Rs 14 lakh crore. The government feels that the financial position of almost all banks will improve with the infusion of huge amount of cash. The banks will then have money to loan out to new startups and other big companies. This will surely give a boost to the manufacturing sector and will create more job opportunities. With better liquidity, the banks will be in a position to lend at lower rates of interest. This will also help the real estate sector which is in urgent need of infusion of money. With nearly one-third of the money circulation reaching the banks within a short span of eight days, the government now feels that its overall demonetisation strategy is surely moving in the right direction.

Of course, questions have been raised about why exemptions were not earlier given to farmers and families who had weddings to organise. The government’s point was that Prime Minister Narendra Modi wanted utmost secrecy before making the announcement, and had consulted only six persons. These advisers had anticipated problems and had suggested solutions accordingly, but now that more and more problems are coming to the fore, the government is providing more exemptions and solutions. When it was found that people were jamming queues outside banks to exchange old notes more than once, the govt came forward with the idea to use indelible ink to ensure that nobody exchanged old notes more than once. Similarly, farmers and families involved in wedding preparations were given exemptions. The latest problem is that though the government is announcing exemptions, the implementation and execution part needs more speed.

Comments are closed.