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Demonetisation may lead to temporary slowdown of economy, warns President Mukherjee

President Pranab Mukherjee on Wednesday warned that the Centre’s move to demonetise 86 per cent of total cash in circulation may lead to temporary slowdown of the economy.
India TV News Desk New Delhi January 05, 2017 18:25 IST
India TV News Desk

President Pranab Mukherjee on Wednesday warned that the Centre’s move to demonetise 86 per cent of total cash in circulation may lead to "temporary slowdown" of the economy while holding that the move will help in “immobilising black money and fighting corruption.” 

“Demonetisation, while immobilising black money and fighting corruption, may lead to temporary slowdown of the economy,” the President said in his New Year message to Governors and Lieutenant Governors.  

This was his first reaction to the demonetisation move since it was announced on November 8.

“We all will have to be extra careful to alleviate the suffering of the poor which might become unavoidable for the expected progress in the long term,” Mukherjee said. 

“While I appreciate the thrust on transition from entitlement approach to an entrepreneurial one for poverty alleviation, I am not too sure that the poor can wait that long. They need to get succour here and now, so that they can also participate actively in the national march towards a future devoid of hunger, unemployment and exploitation,” he added. 

He said that the recent package announced by the Prime Minister will provide some relief. 

On November 8, Prime Minister Narendra Modi announced that Rs 1,000 and Rs 500 currency notes were no longer a legal tender, saying the move was aimed at eliminating black money, counterfeit currency and terror financing.  

Citizens were given up to Decmber 30 to deposit the old currency in banks. 

Media reports on Wednesday, citing sources, said that about 97 percent of Rs 15.4 lakh crore of demonetised currency notes worth Rs 14.97 lakh crore have been deposited back as on December 30. 

Under fire for the slow pace of re-monetisation and the on-going cash crunch, the government has announced various concessions to promote digital transactions and has been urging the public to move towards an economy that transacts less in cash.