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The rules on currency exchange have been changed again. The government has now announced new concessions for farmers as well as families that have to spend on weddings. The amount that can be exchanged over bank counters has been reduced. Meanwhile, state governments have taken their own decisions. Uttar Pradesh says it will accept old currency notes for land purchases. Maharashtra has decided that theatres where Marathi plays are performing can accept old currency notes.
The almost daily tinkering with the rules is a clear indication that the government is thinking on its feet rather than going by a clear script. The pressure is now evident. The confused communication has not helped either. The key questions now are: How much new currency has been introduced into the economy? What is the estimate of how much cash is needed to lubricate daily transactions? And how many days will it take to close the cash deficit? Effective policy is as much about implementation as it is about ideas.