India Strategy:Surgical strike on black economy

Event

In probably the boldest political move on the economy since 1991 reforms, theModi government has announced demonetization of Rs500 and Rs1000 noteswith immediate effect. The government will see a large unaccounted stashcoming out into the financial system. Real estate and related sectors likeCement and Home Improvement, and Consumer Discretionary spendingshould be most negatively impacted in the short term.

However, the economy should gain massively over the medium term.

Financial Inclusion schemes like Jan Dhan, GST reforms, and the Fintechexpansion of the digital footprint should enable success of this program. Werecommend buying into India in case of any knee-jerk reaction.