'Demonetisation to lower prices, interest rates; investments will suffer'

Thiruvananthapuram: Finance Minister Thomas Issac on Thursday said investments will suffer following demonetisation of high-value currency but conceded that the move will lead to lower prices and interests on loan in the long term.

Addressing media persons here, Isaac said: "In the long run, there would be a correction, but in the short run investments will suffer."

A former Economics professor at the Centre for Development Studies, Isaac also pointed out that the huge non-resident Keralite population, who always used to keep their funds in Kerala, will now prefer to hold them in dollars out of the country.

He said that 25 per cent of the country's currency in circulation is black money, but the way the present demonetisation programme is being carried out is "foolish" and the Kerala economy, which is propped up by a very strong cooperative movement, has been wrecked.

"The Kerala government will ensure that not one person will have any difficulty with the money that they hold in these cooperative banks," said Issac.

He also said that he has written to Union Finance Minister Arun Jaitley asking him to ensure adequate supply of cash so that salaries, pensions and daily wages are paid.

"We request you to ensure that the present limit of Rs 24,000 is enhanced and all these people may be allowed to withdraw an amount not exceeding their salary from the banks and treasuries during the first ten days of December," said Issac.