Analysts say Modi’s abrupt decision to ban the 100 and 500 rupee notes could wipe 1% off India’s 7.3% expected GDP growth over the next two quarters.
Editor’s Remarks: Over 90% of India’s transactions are done in cash, and the country’s central bank is also seeing a slowdown in growth after Prime Minister Narendra Modi’s decision to scrub 86% of the money in circulation. So far, 80% of the bills – or the equivalent of 14 trillion rupees – have been handed in to the central bank, but only 4 trillion rupees have been injected back into the market. Indians are still lining up to exchange the old bills, faced with an acute shortage of cash following the November 8th decision. It remains to be seen whether, faced with the giant democracy’s slowdown, investors will continue to seek opportunities here or go looking for greener pastures.
What to watch: Narendra Modi, India’s GDP, China