There is no end to money problems. After a 3 day holiday to banks, the banks are saying no cash. Where will the common man go. People are still drawing their salary across the country in installments. The Government has locked up our money and giving us in installments . People never before faced such a bad situation and we are at the mercy of bankers.
The main concern will be the 800 million Indians who live in villages, slowly rebuilding their earnings after back-to-back droughts destroyed crops and trade. The currency clampdown, which was aimed at hurting those with unaccounted cash, may impact these folks instead as they lack adequate access to banks or internet services.
Rural India’s support is important if the BJP is to win elections in agrarian states including Uttar Pradesh and Punjab next year. The Government has pledged to double farmer incomes by 2022 and has raised spending on the rural jobs program twice this year from the 385 billion rupees budgeted.
The latest boost includes 40 billion rupees on the world’s largest public works program: the Mahatma Gandhi National Rural Employment Guarantee Act. Another 30 billion rupees will be spent on farm related activities.
The Government needs to do more to cushion the economy as the rural jobs program creates fewer jobs than needed, said Jay Shankar, a New Delhi-based economist who’s studied India’s rural economy. While public spending is needed to boost demand, any new program would take about 1.5 years for implementation, he said.
The Nifty Fast Moving Consumer Goods index has fallen 7.2 percent since Modi’s Nov. 8 announcement, steeper than the 4.4 percent decline in the broader gauge.
Recovery in rural demand will be delayed until October-March 2018 and companies selling goods such as soaps and cookies could report profit declines through January-March 2017, analysts at Religare Securities Ltd., including Varun Lohchab, wrote in a report on Monday.
“Market is underestimating the sharp slowdown in earnings growth,” they said. “Stay cautious.”
