HDFC chairman Deepak Parekh, who earlier praised the Narendra Modi government for dissolving high currency denominations of Rs 500 and Rs 1,000 notes to fight back black money menace, now feels the move has derailed the economy in the short term, a CNBC TV18 report said.
"Obviously demonetisation has derailed the economy in the short term. I expect the budget to take the disruption into account," Parekh told CNBC TV a day before.
Last month, the chairman of the country's largest private mortgage lender had appreciated the prime minister's bold move to stamp out corruption, and termed it as the “biggest of all big-bang reforms” undertaken by any government so far, the report said.
Although the move has been welcomed by majority of citizens across the country, the government had been receiving the flak for remaining unprepared to deal with the situation and putting people into hardship for lack of cash at the ATMs and bank branches.
Also, the domonetisation of high value currency notes has already begun to hurt the economy, especially the rural and unorganised sector that are dependent on cash for their regular transactions. Reports of small and medium enterprises cutting down production levels due to falling orders coupled with steady rise in unemployment has already made experts and economists vary of the government's note ban exercise.
With the economy showing signs of slowdown, it is in this regard HDFC's Parekh indicated that business confidence has been hit by demonetisation and factories are not working at full capacity.
“Business confidence will be high when factories are working at 100 percent capacity, but no factory is working anywhere near 100 percent,” CNBC TV report said quoting Parekh.
Updated Date: Dec 08, 2016 10:50 AM