Note ban affected 56 per cent economic activity, says Kerala Economic Review

Cash-intensive sectors such as retail, hotel and transport account for over 40 per cent of the state’s economy, and the primary sector accounts for another 16 per cent of the economy. Thus, 56 per cent of the economy was immediately affected by the demonetisation, said the report.

Demonetisation hit revenue from tourism and reduced flow of remittance. Demonetisation affected remittances because of difficulties in withdrawal from banks, the report said.

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According to estimates in comparison with the corresponding month of the previous year, domestic tourist traffic fell by 17.7 per cent in November 2016 and foreign tourist arrivals by 8.7 per cent. The corresponding figures for October 2016 was a positive 5.2 per cent and 6 per cent, respectively, the report said.

The RBI decision to keep cooperative banks out of the note exchange process damaged the reputation of the institutions, which handle 60 per cent of deposits, the report said. The action led to closure of banking activities at democratically-run primary agricultural cooperative societies in Kerala, it added.

The report said that at current prices, the Gross State Domestic Product showed a growth rate of 11.85 per cent during 2015-16 as against 2014-15. However, the growth rate of the Net State Domestic Product at current prices was 12.28 per cent in 2015-16 compared to 13.37 per cent in 2014-15.