The Indian Sales Managers Index (SMI) for March, shows that the Indian economy is in recovery mode from December’s demonetisation policy. The abrupt impact of demonetisation hit small and medium size businesses hard as they predominately rely on cash based transactions. The March Headline SMI increased to an index level of 62.9 from 60.2 in unadjusted terms. Sales growth, as reported by the unadjusted Sales Growth Index, has improved from 57.3 in February to 61.9 in March and coupled with a strong uptick in the Business Confidence Index suggests that the demonetisation impact has started to wear off.
sales growth Index
Prices paid Index………see how prices are boucing back
Dr Viral acharys was quoted in MINT “I think everyone should keep in mind that the remonetisation is taking place at a very fast pace. We have some way to go, but I think we expect that within two to three months we will reach full currency in circulation. It will be slightly lower, but it is in that ballpark (number),” he said.
I think if full currency with public gets normalised as Dr Viral Acharya expects over next couple of months, RBI will have a problem at its hand of rising inflationary pressures in an economy where only one engine of economy i.e consumption is doing well.
