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India Gambles with Its Currency

Pramit Pal Chaudhuri

GIS, 2017

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The world is waiting to see whether India’s surprise move in late 2016 to “demonetize” its economy will unleash the country’s latent output, productivity and prosperity. Journalist Pramit Pal Chaudhuri provides a succinct analysis of the experiment’s ripple effects on India’s huge informal sector and how they might boost Prime Minister Narendra Modi’s chances of a second term. getAbstract suggests this information-packed report to financial policy makers, business executives and investors watching the Indian economy.

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India’s government revealed in late 2016 that it would remove from circulation all 1,000- and 500-rupee [about $15.60 and $7.80, respectively] notes, the highest denominated currency notes in India and 86% of its circulating money.
A major motivation for the move was to rid India’s economy of “black money,” which is untaxed and fuels political corruption, among other negative fallouts.
Although the immediate cash shortage that followed had eased by early 2017, GDP will likely decline for the fiscal year of 2017, as consumer and business spending have fallen off and manufacturing revenues and jobs have declined.

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Pramit Pal Chaudhuri is the foreign editor of the Hindustan Times, an Indian newspaper.

India Gambles with Its Currency

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