India’s central bank says cash crisis is hurting the economy

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The acknowledged Wednesday that the country’s ongoing cash shortage is hurting the economy.

The central bank slashed its growth forecast for the current financial year by half a percentage point, citing “uncertainty” resulting from Prime Minister Narendra Modi’s shock decision to ban 500 and 1,000 rupee notes.

The ban, which was announced on Nov. 8, abruptly took 86% of legal notes out of circulation and led to an acute cash shortage.

More than 90% of daily transactions in India are made using cash, and analysts predict the disruption could knock 1% off India’s 7.3% growth rate over the next two quarters.

The central bank also sees evidence of slower growth as millions of Indians continue to line up to deposit canceled notes.

Source : CNN