Modi’s demonetization drive has hit India’s most vulnerable sections hardest, but its also hit the poorest, a report has found.
The report, released on Tuesday by the Centre for Economic Policy Research (CEPR), said the “worst hit” sections of the economy were “most vulnerable”.
The report said the demonetised Rs 500 and Rs 1,000 notes were the worst hit sectors of the Indian economy, with about 80% of the notes seized.
The worst hit sections of Indian economy are the most vulnerable, the report said.
“As the economy recovers from the demonets, the poor, particularly the poor farmers, will be most affected,” said Pramod Kishore, managing director at CEPR, adding that the government should target those sectors.
The RBI had said the government will take action to curb the black market use of Rs 500, Rs 1 and Rs 10 notes in the next two months, in line with Prime Minister Narendra Modi’s decision to withdraw all cash transactions from November 31.
“The government will also take a hard line on black money and illegal financing in the country,” RBI Governor Raghuram Rajan said on Tuesday.
But economists and analysts have questioned how the government can go on with the scheme if the economy is not doing so well, especially as it has also made a large number of other reforms.
India’s economy contracted by 7.3% in the fourth quarter, with the loss of more than Rs 10 trillion, according to data from the Bureau of Statistics (BIS).
Analysts say the economy was still on track to grow at a 2.4% annualised rate in the current financial year.