The effects of India’s currency reform? "Chaos" say analysts
NEW DELHI — The sudden withdrawal of 86 per cent of India’s currency has left cash in short supply, retail sales stumbling and wholesale markets in turmoil.
That’s just the immediate fallout from Prime Minister Narendra Modi’s surprise effort to stamp out corruption by making cash hoards in large denomination bills worthless. But what lies ahead could be even worse, some analysts say.
“Basically, you’ve created chaos,” said Steve H. Hanke, an applied economist at Johns Hopkins University in Baltimore and a global authority on currency policy. “India is a cash economy. It’s not like Europe or the U.S. where everyone is running around with a credit card. That’s not the world of India.”
“It doesn’t look like this thing was thought through at all,” he said.