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

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