Reserve Bank of India Governor Urjit Patel on Thursday hailed the government’s move to junk Rs. 1,000 and old Rs. 500 currency. He said this would significantly transform the economy though the public may face some hardship.
“The withdrawal of specified bank notes will impart far reaching changes going forward,” Mr. Patel said in his foreword to the bi-annual Financial Stability Report, which was released by the central bank on Thursday.
“It is expected to significantly transform the domestic economy in due course in terms of greater intermediation, efficiency gains, accountability and transparency through increasing adoption of digital modes of payments, notwithstanding the short-term disruptions in certain segments of the economy and public hardship,” he said.
“Overall, there is little room for complacency and it is important to guard against sporadic volatility in financial markets.”
Mr. Patel said the report was released at a time when global uncertainties were on the rise with a uptick in interest rates in the U.S. and rise in some commodity prices, particularly crude oil, which increased the risk of spillover to emerging markets.
However, domestic macro economic conditions remained stable with significant moderation in inflation, though growth momentum had slackened recently, he added.
