The government does not have any exact data to show the ‘windfall’ from the demonetisation of high-value notes, said Economic Affairs Secretary Shaktikanta Das.
But the November 8 decision to replace old ₹500 notes with new ones and scrap ₹1,000 notes has resulted in banks having enough low-cost deposits to give loans at lower interest rates, he said.
“There are no statistics on the impact of demonetisation. What people are talking about are impressions and presumptions,” he told BusinessLine in an interview.
Asked about the government’s basis of stating that the impact of demonetisation would not spill over into the next fiscal year, Das said that initially informal and cash-based sectors were impacted by the cash crunch, but they would now begin to spring back as remonetisation is almost complete.
“Cash is available in sufficient quantity and restrictions on withdrawal except those from savings accounts are lifted. But how many people draw more the mandated ₹24,000 per week or ₹1 lakh per month from their savings accounts?” he said.
Sectors such as agriculture have not been affected by demonetisation, Das added. “The impact, if any, of demonetisation will not spill over to next year. It would have impacted in the last two to three months but now we are almost back to normal,” he stressed.
Lower rates expected
While he declined to comment on the Reserve Bank of India’s monetary policy statement next week, Das said: “As far as banks and surplus liquidity is concerned, I think there is an expectation that banks will reduce their lending rates as they also have low-cost deposits.”
A decision on the policy rates will be taken by the Monetary Policy Committee, he said.
The RBI will make its sixth bi-monthly policy statement on February 8.
Das noted that banks will have to use the idle cash for lending.
“They have to lend, else what will they do with the idle cash? Last year, as a temporary measure, we had raised the market stabilisation scheme limit to ₹6 lakh crore,” he said, adding that this is unlikely to be done in the next fiscal year as well.