Former Prime Minister Manmohan Singh has been one of the biggest critics of the note ban decision announced by Prime Minister Narendra Modi. He was the first leader to have warned that the demonetisation announcement will slow down the economic growth by at least 2%. He was proved right when the GDP data, released last month, showed that India’s economic growth had slowed down to its three year low at 5.74%.
Even Union Finance Minister Arun Jaitley made a rare confession that the slowdown in the economic growth was a matter of concern.
On Saturday, Dr Singh, an economist of repute, said that the Indian economy was on a “downhill path” because of the “adventure” of demonetisation last year, which was not required at all, either technically or economically.
Singh, also an architect of the economic liberation started in 90s, said that demonetisation had not been successful in any civilised country, except some Latin American nations.
“I don’t think demonetisation was at all required… I don’t think it was technically, economically necessary to launch this adventure,” he said at the Indian School of Business Leadership Summit in Mohali when asked if the notes ban was a right decision.
Prime Minister Narendra Modi on 8 November last year had declared Rs. 500 and Rs. 1,000 notes illegal.
Singh said that the process involved withdrawing almost 86 per cent of currency from circulation and “there was bound to be fallout which we are all seeing.”
“The economy has slowed down as I had projected a few months ago as a result of demonetisation and also the fact that demonetisation has been accompanied by the GST (Goods and Services Tax), which is a good thing that we have done in the long term. But in the short term, there are glitches that need to be resolved. Therefore, the economy has experienced a downhill path,” the former prime minister was quoted by PTI.
Singh said that current government led by Modi needed to do certain things immediately to boost the economy.
He said, “When we were in office, investment rate in the economy was 35-37 per cent but now it is less than 30 per cent. Private investment in particular is not growing.”
Singh’s reaction to demonetisation comes just a week after he warned that there will be a sharp decline in economy due to the recent roll out of GST regime.
BJP leader and Rajya Sabha MP, Subramanian Swamy, too recently confessed that the Indian economy was heading for a “major depression” and it could “crash” soon if efforts are not put to revive it.
Swamy claimed that he had written a 16-page letter to the Prime Minister a year and a half ago, warning him about the economy, which was in a “tailspin”.