Modi may need 6 more months to replace India's junk bills

Mumbai

FOR Indians expecting respite from the government's clampdown on cash, here is a reality check: it probably will not come soon.

Prime Minister Narendra Modi's administration may need until May 2017 to replenish the stock of now worthless bills, according to Saumitra Chaudhuri, an economist who advised Mr Modi's predecessor. The government on Nov 8 banned notes of 500 rupee (S$10) and 1,000 rupee denominations in a surprise move against graft and tax evasion.

Delays in replacing the currency risk prolonging the pain in the US$2 trillion economy, where about 98 per cent of consumer payments are made in cash. Deutsche Bank AG predicts that the crunch could easily shave off a half-point from India's growth in October-December, which could imperil its position as the worl…