People were holding high denomination notes to keep tax unaccounted for money. Some sectors like real estate were using cash to avoid tax.
We should redefine the metric for effective lending, viz., prioritise loans to enterprises, which will generate more employment.
There are tens of thousands of bank branches and 4,000 currency chests. We need to be careful and try that this is a number which is not a mere estimate but a verified number both physically and in the accounting sense.
This is a once in a lifetime event. It is very rare to remove 86% of the currency in circulation in one go. The logistics of such an operation are mammoth.
The lack of a consistent policy from major economies is the main source of volatility.
One of the things that the public sector banks need to do is to raise private capital from the market and not rely on government largesse.
