Criticising Prime Minister Narendra Modi’s decision to demonetize higher value currency notes, noted American economist Steve H Hanke said India’s “war on cash” has pushed its economy into contraction as anticipated.
“#Modi has officially steered #India s economy into contraction as a result of his war on cash. Just what I anticipated would happen,” Hanke, an American applied economist at the Johns Hopkins University in Baltimore, Maryland said in a series of tweets.
“Manufacturing takes the hit as the war on cash in #India adversely impacts the economy. #Modi,” he added.
#Modi has officially steered #India’s economy into contraction as a result of his war on cash. Just what I anticipated would happen. pic.twitter.com/igg8HyQKIh
— Prof. Steve Hanke (@steve_hanke)
Hanke, who is also a Senior Fellow and Director of the Troubled Currencies Project at the Cato Institute in Washington, DC further said, “Demonetization will cause #India to slip from the leaders board for economic growth in #2017.”
Demonetization will cause #India to slip from the leaders board for economic growth in #2017. pic.twitter.com/VP9jQJLTWO
— Prof. Steve Hanke (@steve_hanke)
Referring to interest rate cut by some Indian banks post demonetization, the eminent economist said, ‘Indian #banks have slashed interest rates to stave off economic decline and to spark investment. A #demonetization disaster @zerohedge.”
Indian #banks have slashed interest rates to stave off economic decline and to spark investment. A #demonetization disaster @zerohedge
— Prof. Steve Hanke (@steve_hanke)
Prime Minister Narendra Modi on Novermber 8 had announced demonetization of Rs 1,000 and Rs 500 notes making them invalid in a major assault on black money, fake currency and corruption.
Following demonetization, the manufacturing sector contracted in December as new work orders and output took a knock for the first time in 2016.
The Nikkei Markit India Manufacturing Purchasing Managers’ Index (PMI) — an indicator of manufacturing activity — fell to 49.6, down from 52.3 in November.
The index came in below the crucial 50 threshold — which separates contraction from expansion — for the first time in 2016 in December. The services sector also contracted in December, contracting for the second straight month, with new business orders falling to a three year low.
Source: dnaindia.com