The surprising move by the authorities in India to withdraw the banknotes with the highest nominal caused chaos among the population. And the current monetary crisis could hurt the status of India as the fastest growing economy in the world. In this, India can fall from the throne after removal from circulation of banknotes with the highest nominal value, which will greatly affect the operation of the business.
In a country where nearly 90% of transactions are made with cash, the shock will reverberate for some time. The analysts believe that the decision of India to eliminate the largest their bills will hit the GDP th country with at least 1% and will probably take many more of the current boom in the Indian economy.
According to many economists the 3% decline in the growth rate would not be surprising.
Sectors such as retail, construction and real estate rely heavily on cash, and they contribute to 30% of GDP. The institution estimates that hit in these areas can contribute to 2% decline in economic growth over the next two quarters.
The lack of banknotes and restrictions on withdrawals make it difficult to conduct transactions, even for those who have legally wealth.
Moreover, the currency crisis in India has put cross border trade between Bhutan and Bangladesh under trouble. Though a bilateral issue between the two neighboring countries, thousands of Indian citizens, dependent on this trade, have become victims of the situation.
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