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Demonetisation effect: retail inflation at six-year low in  November

Samarth Srivastava

Samarth SrivastavaBy Samarth Srivastava

Published on 14 Dec 2016 12:41 PM GMT

Demonetisation effect: retail inflation at six-year low in  November
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Demonetisation effect: retail inflation at six-year low in  November
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Lucknow: Demonetisation may not have made its impact on some other fields but it has certainly affected one area-- inflation. The retail inflation which concerns the common man has come down to little over three per cent which is six-year low.

The rate was 3.19 per cent last month which was lower even than the rate in the previous month-- October. The rate was 4.1 per cent in the semi-urban and rural areas. Market sources do not anticipate any rise in months to come.

Cash-crunch being faced in the wake of note-ban may be partly responsible for lower prices of food and other commodities in the market.

It was rather unexpected. Even Reserve Bank of India in its bi-monthly review had forecast the rate to remain at five per cent by the end of the current financial year.

In addition to prices, the new move is likely to lead to higher collection of taxes and fall in interest rates for home and other loans. Bank deposits have swollen and the RBI has withdrawn its order for increase in the CRR rate. Thus, the banks will be flush with money. Higher availability at lower cost is likely to bring down interest rates.

With more raids being conducted by income tax officials in coordination with Enforcement Directorate and police are likely to bring in more money to the banks. According to one estimate, new and banned notes of the order of Rs 100 crores have been seized so far. More raids are likely to be conducted in days to come.

Different sources give different totals of the banned notes returned to the bank. According to one top RBI source, the banned notes deposited in different banks have totalled Rs 11.5 lakh crores so far out of the total 15 lakhs which were in circulation before the demonetisation announcement. About fortnight is left for the deposit to be made. Therefore , he expects only five per cent banned notes to remain undeposited.

Also read :Former RBI governor Bimal Jalan questions demonetisation

Samarth Srivastava

Samarth Srivastava

Employed as sub-editor at newstrack.com. A learner, who loves covering sports, entertainment and defence kind of stuff.

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