Currency Demonetisation — Significant Structural Benefits on the Cards for India
The government's move to demonetise Rs. 500 and Rs. 1000 notes carried short-term GDP impact but meaningful long-term structural upside.
Tejas Shah
Proprietor of Silicon One and Silicon Systems, AMFI-registered Mutual Fund Distributor since 2004, based in Vadodara.
The Indian government's move to demonetise Rs. 500 and Rs. 1000 currency notes was expected to have a transitory impact on GDP growth in the short term, but was positioned to deliver significant structural benefits over the long term.
What it meant for investors
With more liquidity flowing into the banking system, interest rates on fixed deposits were likely to decline — a positive for debt funds as well as the broader stock market, as displaced savings looked for better-yielding homes.
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