|
|
|
|
Search: 
Latin American Herald Tribune
Venezuela Overview
Venezuelan Embassies & Consulates Around The World
Sites/Blogs about Venezuela
Venezuelan Newspapers
Facts about Venezuela
Venezuela Tourism
Embassies in Caracas

Colombia Overview
Colombian Embassies & Consulates Around the World
Government Links
Embassies in Bogota
Media
Sites/Blogs about Colombia
Educational Institutions

Stocks

Commodities
Crude Oil
US Gasoline Prices
Natural Gas
Gold
Silver
Copper

Euro
UK Pound
Australia Dollar
Canada Dollar
Brazil Real
Mexico Peso
India Rupee

Antigua & Barbuda
Aruba
Barbados
Cayman Islands
Cuba
Curacao
Dominica

Grenada
Haiti
Jamaica
Saint Kitts and Nevis
Saint Lucia
Saint Vincent and the Grenadines

Belize
Costa Rica
El Salvador
Honduras
Nicaragua
Panama

Bahamas
Bermuda
Mexico

Argentina
Brazil
Chile
Guyana
Paraguay
Peru
Uruguay

What's New at LAHT?
Follow Us On Facebook
Follow Us On Twitter
Most Viewed on the Web
Popular on Twitter
Receive Our Daily Headlines


  HOME | Business & Economy (Click here for more)

Indian Demonetization’s Results Still Unconvincing after One Year

NEW DELHI – As the shock that India was withdrawing its high denomination banknotes – 86 percent of total currency circulation –reached on Wednesday its first anniversary, the measure has failed to convince people of its success given that economic growth has slowed down since.

It was late on Nov. 8, 2016, that Prime Minister Narendra Modi made a sudden appearance on television to announce that, within a few hours, all high-denomination notes would become worthless unless deposited in banks to redeem their value.

The government justified the step by saying it was aimed at combating a black economy, fake currency and the funding of terror.

Some 99 percent of the currency was returned to the banking system, the Reserve Bank of India reported in its annual report published late August, a fact confirmed by Finance Minister Arun Jaitley.

However, the economy has lost momentum, growing at a rate of 5.7 percent last quarter, compared to the 7.3 percent growth in the quarter before demonetization was announced.

The informal sector – which adds up to more than 45 percent of the Indian economy if agriculture is included – had been hit hard, experts told EFE.

The digitalization of payments, which shot up initially, has also declined, while the impact of an increased number of taxpayers was still uncertain.

Martin Patrick, chief economist at the Center for Public Policy Research, told EFE that digital transactions had reduced to 107 trillion rupees ($1.6 billion) after peaking at $2.29 billion in March, and might even return to pre-demonetization levels.

Patrick said that demonetization had failed in all three of its objectives: fighting black money, counterfeiting of currency and terrorism.

“These were the three important objectives, later they added that these were not the main concerns, the main concern was a cashless economy,” the economist said, adding that the three main objectives were not translated into reality.

“That shows the failure of demonetization,” Patrick said.

Although he acknowledged the step had widened the tax net and led to a slight increase in digital payments, he said that the short-term cost outweighed the long-term benefits.

Pronab Sen, India director of the International Growth Centre, said to EFE that it was still too soon to understand the real impact of demonetization.

“It is a measure designed to change the mindset, to change the way people thought about corruption, the way people thought about the payment of taxes and so on,” Sen said, adding that as an economic measure demonetization was not worth it.

Questions remain open about demonetization’s contribution to the growth rate slowing down, in which the imposition of the new Goods and Services Tax (GST) – which replaces 17 direct and indirect taxes – in July is also seen as a major factor.

Sen said that it was foreseen that GST would have an adverse impact, but the announcement of demonetization might have complicated its launch.

 

Enter your email address to subscribe to free headlines (and great cartoons so every email has a happy ending!) from the Latin American Herald Tribune:

 

Copyright Latin American Herald Tribune - 2005-2015 © All rights reserved