Indian GDP May Suffer 2% Decrease Over Currency Reform – Ex-Prime Minister

The latest Indian currency reform, implemented via a demonetization process, may result in a GDP decrease of two percent, former Prime Minister Manmohan Singh said Thursday.

NEW DELHI (Sputnik) – On November 9, Indian authorities initiated a currency reform aimed at fighting corruption and shadow economy, under which the banknotes with the nominal value of 500 and 1000 rupees (about $8 and $15) will be withdrawn from circulation. According to media reports, citizens have had to spend hours in line to change the old banknotes for the new ones, while there is a limit on withdrawing new banknotes.

"This demonetization scheme, used to carry out the reform will damage agricultural growth, growth of small enterprises and will harm everyone who works in the shadow economy. According to my estimates, our state’s national income, GDP may decrease by 2% as a result of what was undertaken," Singh said.

Singh called on the Indian Prime Minister Narendra Modi to make constructive proposals related to the ways of implementing the reform and preventing the "disaster" which the Indian people faced.

Present governmental restrictions allow Indians to only withdraw up to 2.000 rupees (approximately $29) from their cards per day and less than 24.000 (approximately $349) rupees from their bank accounts per week.

According to the former prime minister, some 60-65 people have died while standing in line to banks and cash machines to date.