The Reserve Bank of India finally acknowledges the issues plaguing the region. Every since the ban on particular banknotes was issued, the economy has been on the brink of stagnation. Moreover, the cash shortage in the country is only contributing to more problems in the coming weeks. Things are not looking positive, and the end of 2016 will not be a joyous occasion for most Indians.
India’s Financial Situation Only Grows Worse
After several weeks of financial turmoil, the Reserve Bank of India has slashed its growth predictions forecast for the rest of the year. Although it has only be lowered by 0.5%, it is a significant hint at what the future will hold for India. Banning the 500 and 1,000 rupee notes is probably the worst financial decision in the country’s history to date.
Ever since that time, the global economy has come to a grinding halt. India is a country where over 90% of daily transactions take place in cash, but the rupee note ban has made that virtually impossible. Long lines emerge outside every bank branch as consumers wait to exchange “invalid” currency for the new bills.
To make matters worse, supply distribution is a critical problem right now. It takes far too long before the population can get their hands on the new bank notes, which only makes things progressively worse. Although this damaging effect on the economy is expected to be only temporary, it will drag down financial growth for India the longer this trend continues. Right now, there is no proper resolution in sight anytime soon.
Interestingly enough, this new growth projection does not affect the rate at which RBI lends money to other banks. The 6.25 percentile remains in effect, which came as quite a surprise. Cutting rates makes a lot more sense during these troubling times, but the RBI prefers a wait-and-see attitude. That decision could come back to harm them in the long run, though.
While all of these issues continue to plague the country, Bitcoin adoption has never been higher in India. Consumer demand for cryptocurrency continues to increase, and the average market price is well above the global average for multiple weeks now. Although this effect has been minimal on the global Bitcoin ecosystem, the price per BTC continues its bullish trend.
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