Tuesday, January 03, 2017

India's Physical Cash Elimination 
Leading To Fall In Economic Activity
"Over 50 days after Indian Prime Minister Narenda Modi stunned India's population when he announced on November 8 he would unexpectedly eliminate 86% of the existing currency in circulation in what was supposed to be a crackdown on the shadow economy, but instead has resulted in a significant hit to the broader, cash-based economy, overnight we noted the first official confirmation of how substantial the impact of Modi's demonetization has been, when the Nikkei India Manufacturing Purchasing Managers Index printed at 49.6 in December, the first contraction reading since December 2015, as the war on cash crippled demand. According to the report, output and new orders fall for first time in one year; companies reduced buying levels and payroll numbers; Input cost inflation accelerated, while charges rose at softer rate .. A continued slowdown will strip India of its position as one of the world’s fastest-growing big economies and risk a political backlash against Modi."
LINK HERE to the article

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