Demonetization
Did it actually lead to a shift in savings pattern?
A full 9 months after the demonetization drive was announced, the jury is still out on the relative merits and demerits of the drive. The supporters of the drive argue that demonetization has surely helped in slamming the brakes on the creation of black money as well as the circulation of black money. They also point to the rapid growth in digital transactions leading to better audit trails. The critics still hold on to the view that demonetization put industry in general and SMEs in particular behind on the growth curve. But the real question is whether demonetization led to savings shifting from real asset to financial assets?
Dr. Viral Acharya thinks so…
The deputy governor of the RBI, Dr. Viral Acharya, strongly believes that the demonetization drive had the effect of catalyzing a shift in the asset mix. For a long time, the Indian households preferred the safety of property and gold. With demonetization putting the brakes on cash transactions, both these asset classes have got impacted. The result is that money is flowing into financial assets. If the massive response to IPOs is any indication, then Dr. Acharya surely has a point. The second indicator is the way mutual fund inflows have picked up in the last couple of years. Increasingly, investors prefer the financial assets route where the KYC norms will ensure that they do not worry about the taxman. Look at banking stocks READ MORE-Best Online Stock Trading, Financial Services & Mutual Funds Investment Solution provider India - Trustline












