Market experts look up to Budget for measures to ease demonetisation pain

The Indian equity markets are looking up to the Union Budget as a trigger for a move upwards as experts expect the government to announce measures to ease the pain from the demonetisation of Rs 500 and Rs 1,000 currency notes from 9 November.

The demonetisation of the high-value notes sucked out about 86 percent of the currency in circulation, while the RBI was not ready with enough replacement currency.

Reuters

Reuters

There was Rs 15.44 lakh crore worth Rs 500 and Rs 1,000 notes in circulation on 8 November, when the scheme was announced.

The resultant cash crunch slowed down the demand in the economy and also there has been widespread job losses across the SME and the unorganised sectors.

In the rural area, where the companies were witnessing a revival in demand after the better-than-expected monsoon this year, the impact has been all the more deeper.

Ever since the demonetisation announcement, the BSE Sensex has lost 2.5 percent, with the investors losing Rs 2.30 lakh crore.

There are expectations that the government will announce income tax sops for the salaried class and also sops for the rural sector in it bid to ease the pain.

However, it remains to be seen whether the government has enough funds to boost the demand in the economy.

For full coverage of Union Budget 2017 click here.


Updated Date: Jan 14, 2017 20:03 PM

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