Documenting the agony of people whose hard earned money was turned valueless overnight on November 8, 2016.
Analysis using Milton Friedman’s theory shows India’s GDP growth is likely to crawl back to its long-run level. However, we cannot deny the loss in interim GDP because of demonetisation.
Deposits in excess of Rs 5,000 will only be credited once, and that too after the depositor is questioned as to why the notes weren’t deposited earlier.
The first phase of Modi’s demonetisation exercise, until December 30, 2016, could be viewed as a “sunk cost”, after which the old notes be remonetised.
Nineteen billion notes of Rs 100, 50 and 10 denomination released so far, says the RBI. Would engaging foreign printing presses have helped with the Rs 500 and Rs 2,000 note supply crunch?
Summers, a proponent of doing away with larger-value currency notes, says it is highly problematic for the government to expropriate from even a few innocent victims who do not manage to convert their money.
On Wednesday, the founder of Microsoft had described demonetisation as a “bold move” and an “important step” in moving away from a shadow economy.
Will the supply of India’s vegetables and fruit falter before the new currency notes are widely circulated? And what will happen to farmer incomes in the short and medium-term?