Prime Minister Narendra Modi’s crackdown on black money may boomrang on the BJP in the near future that is what analysts say. Poltically the BJP will be forced to be on the back foot predicted some politcal analysts.
Finance Minister Arun Jaitley said November. 9 the move will damp consumption in the short term, a belief that’s helped send an index of consumer discretionary goods to a four-month low.
The measure will “lead to a temporary squeeze in small-ticket consumption and discretionary spending .Modi’s decision to withdraw 500 and 1,000-rupee notes, which accounted for 86 percent of the money in circulation, has virtually stalled the economy.The move will disrupt segments of the economy like property and gold where cash transactions play a vital role, analysts say.
Prime Minister Narendra Modi’s radical move at demonetisation has been largely praised by financial experts.
The government has said that the fact that the ban on the old notes was announced just four hours before they were declared invalid on 8th November, was essential to prevent those with black money from channeling their untaxed cash into buying assets like property or gold.
There will be an “adverse” impact on shares of developers, cement producers and infrastructure companies, it is reported. The cash crunch will curtail consumer spending for the next three to six months.”
But the money managers and big bankers. say the crackdown on illegal wealth will boost liquidity and open up room for more interest-rate cuts. Banks deposits have risen by $48 billion after last Tuesday’s ban as customers rushed to deposit the old bills.
“There may be temporary setbacks in the immediate term but investors should use such opportunities to increase their equity allocations,” opined an economy expert.
But it looks like the PM is prepared to take the risk and face the consequences. He is confident that the people are with him.
U.Srinivas
Editor
