The rural economy suffered disproportionately due to demonetisation because most transactions here are cash-based. By turning farm markets into buyers’ markets, demonetisation may have also contributed to the decline in prices of pulses. The slowdown in the economy, which started before demonetisation, also seems to have been exacerbated by demonetisation. New project announcements declined sharply in the wake of demonetisation, a Centre for Monitoring Indian Economy (CMIE) analysis showed, hurting the capex cycle. Contrary to what some economists predicted, the dividend from RBI to the government was lower because of demonetisation.

Source: Mint November 07, 2017 01:41 UTC