IMF expects more on India’s Demonetisation

The International Monetary Fund (IMF) has emphasised that Government of India should ensure the enough cash is available for the people for their necessary spending.

IMF has also said that it’s very important that the process of Demonetisation is well planned and implemented.

The IMF spokesperson Gerry Rice told the journalists on Thursday in Washington that in terms of the implementation, given the large role of cash in everyday transactions in India’s economy, there clearly is a critical need to increase the supply of new bank notes to avoid disruptions and restore household spending and capacity.

In response to the question asked on the wisdom of the move by Narendra Modi government and the way it’s being implemented, Mr. Rice said that the overall goal of the authorities in India is to clamp down on illicit financial flows.

“We are supportive of that broad objective”, he said.

Mr. Rice however also said that in these Demonetization efforts, which a number of countries go through from time to time, it’s very important that the process is well planned and implemented.He suggested that Indian Government’s priority should be to print, distribute, and replace bank notes so that economic activity and particularly consumption spending is not disrupted for a lengthy period of time.

Mr. Rice told the journalists that as per the IMF’s understanding, the Indian authorities, that means the Ministry of Finance and the Reserve Bank of India, are working very hard to replace bank notes and ease the cash shortages in the economy, and with that, we would expect the situation to normalize gradually.