Nov 15, 2016

'India currency move is bad economics'

India's dramatic move to scrap 500 ($7.60) and 1,000 rupee notes is poor economics, a leading economist says.

Kaushik Basu, the former chief economist for the World Bank, says the "collateral damage" is likely to outstrip its benefits.

The overnight ban on the notes last week was intended to crack down on corruption and so-called "black money" or illegal cash holdings.

But it sparked scenes of chaos outside banks and ATMs.


Low-income Indians, traders and ordinary savers who rely on the cash economy have been badly hit with hordes thronging banks to deposit expired money and withdraw lower denominations. As the anger mounted, the government raised limits on cash withdrawals on Sunday.

(BBC News)