Why did the Government take out India’s Big Rupee Banknotes

I have acquired a new domain. So, you will be able to read this article by clicking on the following link:  http://monishborah.com/2016/11/09/why-did-the-government-take-out-indias-big-rupee-banknotes/

Advertisements

2 comments

    • Well, supply has not been hit but people’s purchasing power has been negatively hit due to capital controls following demonetization. So, there should be more goods in the market than people can buy, so it should lead to deflation or decrease in food prices rather than inflation. Since everyone in the market also knows this, speculators will also be hedging their bets on lower food prices which should drive the prices even lower.

      But, if the government is not able to inject the rural sector with sufficient cash quickly- the farmers will not have enough money to buy seeds, fertilizers or excess labour for the upcoming rabi season which might increase the price of food in 4-6 months time.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s