President Pranab Mukherjee on Thursday said that demonetisation of Rs 500 and Rs 1,000 notes would temporarily slow down the economy. “Demonetisation, while immobilising black money and fighting corruption, may lead to temporary slowdown of the economy... We all will have to be extra careful to alleviate the suffering of the poor which might become unavoidable for the expected progress in the long term,” he said in his New Year address to governors and lieutenant governors.

The president said the poor may need some extra help, and praised recent welfare packages announced by Prime Minister Narendra Modi. “While I appreciate the thrust on transition from entitlement approach to an entrepreneurial one for poverty alleviation, I am not too sure that the poor can wait that long,” he said.

The president said that 2016 was a “year of mixed fortunes”. He pointed out that while the economy did well at the start of 2016, poor global demand affected India’s exports. “Reviving exports will remain a challenge but we can overcome it by improving the competitiveness of the domestic industry,” he added.

In his address via video conference, the president also asked governors and lieutenant governors to held manage any tension during the upcoming elections. “Communal tensions may rear their ugly head. Rule of law must form the sole basis of dealing with any such challenging situation,” said Mukherjee.