14 January 2017
Since the costs of the shock currency move of last November continue to mount while the benefits are less obvious, the forthcoming state elections will be a key test for Prime Minister Modi and his economic reform programme.
On 8 November last year, in a surprise move, Prime Minister Narendra Modi announced that the two largest currency bills, accounting for 86 per cent of currency in circulation by value, would be invalid immediately. This shock move led to a nationwide commotion and outrage.
Two months on, it appears that the costs of the cash crunch are outweighing the benefits. Some economic and political fallout of the bold move are inevitable in the short term. It should not be a surprise if Modi suffered some setbacks in state elections that are approaching.
… Pradumna B. Rana is Associate Professor and Coordinator of the International Political Economy Programme in the Centre for Multilateralism Studies at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore.
CMS / GPO / Online
Last updated on 16/01/2017