The economy could return to 8% growth by the end of 2017-2018, says Arvind Panagariya, vice-chairman NITI Aayog.
The theory that all banned notes will come back into the system may not be true. Anup Roy finds out.
Consensus seems a problem before the current session of Parliament ends.
The huge pressure on the currency market largely went unnoticed because of the demonetisation exercise.
RBI on Monday conducted an unprecedented level of liquidity infusion to the tune of Rs 3.3 lakh crore, in which banks bid for as much as Rs 4.5 lakh crore. The central bank said it would conduct a liquidity infusion auction of Rs 1 lakh crore on Tuesday as well, to help banks tide over the liquidity crisis.
'Demonetisation may have been well-intentioned, but it was a major mistake. The government should reverse it. It could at least declare that Rs 500 notes, which many poorer people frequently use, are legal again,' Basu, who till recently was World Bank vice-president, wrote in an opinion piece in The New York Times.
People depositing money with banks in legal tender are allowed to withdraw the equivalent amount without any restriction.
The study says the entire supply chain of goods and services will suffer a massive liquidity shock.
When banks deposit their money with RBI, the central bank offers government securities of equal value. But now, it could be running out of enough securities to offer banks against the overnight deposits.
'There has to be an 18-month transition.' 'But if the government had some prior knowledge that the high value notes were being used for an imminent terrorist activity in the country, then we have to accept the step.'
'Because of the government's step, the people are now going to splurge on consumption.' 'If you ask me, would growth be 8% for 2017-2018, I would say 7.5% because of the demonetisation move would not be very significant.'
With about 2,000 qualified engineers to service ATMs across the country, it is an uphill task to modify 220,000 machines.
The first tranche was raised a few weeks ago and the company was looking to raise more if needed.
Information gathered from a person's social media account will be matched with his or her declared income.
Will demonetisation lead to a rate cut, leading to higher quantum of lending?
A government can't just take away public money, and the RBI can't extinguish its liability. 'The RBI has to honour the value any time a person with legal and taxed money lays claim on the value.'
Significant portion of the funds used to fuel urban demand have become illegal and inoperative.
If RBI has to replace the entire stock of Rs 1,000 and Rs 500 notes with Rs 100 ones, the cost would be more than Rs 10,000 crore.
Even if RBI partially replaces the stock of the high value notes, RBI will have to incur thousands of crores of rupees in cost, say economists.
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