Demonetisation had positive impact on economy: RBI’s Shaktikanta Das explains why

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Published: February 19, 2020 10:52:06 AM

RBI’s Shaktikanta Das, who has on various occasions explained the government’s move, recently said that note ban actually did well to the economy.

 

Shaktikanta Das, RBI GovernorRBI Governor Shaktikanta Das

It has been over three years since Prime Minister Narendra Modi announced demonetisation of Rs 1,000 and Rs 500 notes and RBI’s Shaktikanta Das, who has on various occasions explained the government’s move, recently said that note ban actually did well to the economy. “I think demonetisation has had positive impact on the economy in terms of formalising the economy, checking the so-called parallel economy/unaccounted money. It is still playing out, I will just say that,” RBI Governor Shaktikanta Das told The Indian Express in an interview. However, upon being asked if the Reserve Bank of India took stock of the impact of demonetisation on sectors such as MSME, Shatikanta Das said that they haven’t.

Speaking on India’s inflation spike, RBI Governor told the national daily that the attention is still on growth. “With this temporary spike in inflation, we have not shifted our attention from growth. We are still focussed on growth. Because of the spike in inflation, we have decided to take a pause,” he said. In January 2020, the retail inflation spiked to 7.59%, which is the highest print in 68 months as India witnessed rise in vegetable prices. Meanwhile, Finance Minister Nirmala Sitharaman recently said that except for some perishable commodities, prices of most of the goods and food products are within the acceptable limits.

On NBFC debacle

India’s NBFC sector has been facing liquidity crisis for sometime now. On the same, Shaktikanta Das said that the central bank is “closely and intensively” monitoring the top 50 NBFCs. These 50 Non Banking Financial Companies account for roughly 75% of the total NBFC portfolio. RBI will endeavour “to ensure that no large systemically important NBFC collapses”, The Indian Express cited Shaktikanta Das as saying. “We are very mindful of the aspect of financial stability in the case of banks too. RBI will always ensure that stability of the banking sector is maintained,” he added.

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