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Has India's Currency Ban Stopped Its Economic Momentum?
Critics say the scrapping of 86 percent of the country's currency last November cost India its status as the world’s fastest growing economy.
According to data released this week, from January to March, growth plunged to 6.1 percent – lower than China's 6.9 percent growth in the same period.
People wait in line to withdraw cash. (Photo: A. Pasricha)
Overall growth for the last financial year, which began in April 2016 and ended in March 2017, however, stood at 7.1 percent.
Finance Minister Arun Jaitley has tried to distance the disappointing economic numbers from the currency ban, citing other factors.
“There was some slowdown visible, given the global and domestic situation, even prior to demonetization in the last year,” he told reporters.
The slowdown affected almost all sectors of the economy, with farming, manufacturing and services all taking a hit. With people scrambling to get access to new notes, consumption slowed sharply, impacting both small shopkeepers and large businesses.
Fruit and vegetable vendors wait for customers in New Delhi, India. (Photo: A. Pasricha / VOA)
The government, however, is encouraged by forecasts that the economy is expected to recover swiftly on the back of monsoon rains, which are expected to be plentiful, and a slew of major reform measures.
As economists estimated growth this year will rebound to 7.4 percent, the government pointed out that India’s economy is still among the world’s top performers. Jaitley said given the global scenario, "7 to 8 percent growth, which at the moment is the Indian normal, is fairly reasonable and by global standards very good."
There are widespread expectations of a major economic boost from India’s most ambitious tax reform action since independence – the launch of a nationwide tax that will replace a plethora of levies starting July 1.
The World Bank said this week the reform would lower the cost of doing business for firms and reduce logistics costs.
In the coming year, “we actually have very strong fundamentals of the Indian economy, GDP growth being up, exports have revived and there has been continued reform momentum,” said Frederico Gil Sander, a senior economist at the World Bank in New Delhi.
People in India had to scramble to get new currency for weeks, after last November's currency ban led to massive cash shortages. (Photo: A. Pasricha)
And while demonetization undoubtedly left its imprint on India by slowing down the economy, the government is optimistic there will be long-term gains because the move would help clean up an economy where many businesses and professionals evade taxes, resulting in the generation of what is known as “black money.”
“The message has gone loud and clear and it continues to this day that it is no longer safe to deal in cash,” said Jaitley.
Skeptics say only improved tax collections in the coming years will demonstrate whether that is true, or whether tax evasion remains a challenge in a country where cash transactions are the norm in large sectors of the economy.
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Trump administration opens antisemitism inquiries at 5 colleges, including Columbia and Berkeley
The Trump administration is opening new investigations into allegations of antisemitism at five U.S. universities including Columbia and the University of California, Berkeley, the Education Department announced Monday.
It's part of President Donald Trump's promise to take a tougher stance against campus antisemitism and deal out harsher penalties than the Biden administration, which settled a flurry of cases with universities in its final weeks. It comes the same day the Justice Department announced a new task force to root out antisemitism on college campuses.
In an order signed last week, Trump called for aggressive action to fight anti-Jewish bias on campuses, including the deportation of foreign students who have participated in pro-Palestinian protests.
Along with Columbia and Berkeley, the department is now investigating the University of Minnesota, Northwestern University and Portland State University. The cases were opened using the department's power to launch its own civil rights reviews, unlike the majority of investigations, which stem from complaints.
Messages seeking comment were left with all five universities.
A statement from the Education Department criticized colleges for tolerating antisemitism after Hamas' Oct. 7, 2023, attack on Israel and a wave of pro-Palestinian protests that followed. It also criticized the Biden administration for negotiating "toothless" resolutions that failed to hold schools accountable.
"Today, the Department is putting universities, colleges, and K-12 schools on notice: this administration will not tolerate continued institutional indifference to the wellbeing of Jewish students on American campuses," said Craig Trainor, the agency's acting assistant secretary for civil rights.
The department didn't provide details about the inquiries or how it decided which schools are being targeted. Presidents of Columbia and Northwestern were among those called to testify on Capitol Hill last year as Republicans sought accountability for allegations of antisemitism. The hearings contributed to the resignation of multiple university presidents, including Columbia's Minouche Shafik.
An October report from House Republicans accused Columbia of failing to punish pro-Palestinian students who took over a campus building, and it called Northwestern's negotiations with student protesters a "stunning capitulation."
House Republicans applauded the new investigations. Representative Tim Walberg, chair of the Education and Workforce Committee, said he was "glad that we finally have an administration who is taking action to protect Jewish students."
Trump's order also calls for a full review of antisemitism complaints filed with the Education Department since Oct. 7, 2023, including pending and resolved cases from the Biden administration. It encourages the Justice Department to take action to enforce civil rights laws.
Last week's order drew backlash from civil rights groups who said it violated First Amendment rights that protect political speech.
The new task force announced Monday includes the Justice and Education departments along with Health and Human Services.
"The Department takes seriously our responsibility to eradicate this hatred wherever it is found," said Leo Terrell, assistant attorney general for civil rights. "The Task Force to Combat Anti-Semitism is the first step in giving life to President Trump's renewed commitment to ending anti-Semitism in our schools."
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