Formal Transactions Will Be The New Normal

Nirmala Sitharaman, the eloquent Union commerce and industry minister, is optimistic that the turmoil unleashed by demonetisation will be short-lived. The 57-year-old Rajya Sabha member from Karnataka, who is also the minister of State for finance, believes that the government's drastic measure will formalise transactions and bring in transparency.

- Rajesh Rai

Ms Sitharaman, a post-graduate in economics from New Delhi's Jawaharlal Nehru University, worked with the corporate world before entering politics. Hailing from Tamil Nadu, she was associated with PricewaterhouseCoopers and BBC World Service before joining the Bharatiya Janata Party in 2006. Ms Sitharaman speaks on demonetisation, exports and a whole range of issues in a candid interview.

What impact will demonetisation have on economic growth?

Now, gradually, with more currency coming in, the liquidity situation is easing out. But this quarter (October December 2016) may probably have an impact because transactions at wholesale mandis (markets) and labour-intensive sectors have all been impacted because 86 per cent of your currency has been withdrawn, and you really cannot bring the 86 per cent back in the form of new notes in one go. It will have to be steadily coming in. Despite all the preparations, there will be an impact in December quarter. But I do not think that it will continue further because gradually things will have to come back to some kind of normalcy. The new normal is that more formal transactions will have to happen, and people have to use cheque books, credit cards or debit cards.

What steps is the government taking to support exporters who have been hit by demonetisation?

I have informally discussed this issue with Finance Minister Arun Jaitley. I have discussed the matter with export promotion councils too. The report will be prepared, and we will send it to the Finance Ministry.

With exports picking up, how do you see the trend in coming months?

Many sectors, including petroleum-based segments, have shown revival this time. So, definitely, I can see a ray of hope that now it is going to be steady. It may be slow but steady. Exporters are making their best efforts to come out of the difficult situation. We are hand-holding them.