Dr Manmohan Singh was spot on with his warning on note ban

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Remember the ten commandments of former Prime Minister Manmohan Singh, also an economist of global repute? When he rose to speak in parliament on 24 November, just two weeks after the demonetisation announcement, he made a very brief intervention. He spoke for barely few minutes but his warning for the economy post note ban was chilling.

Except Prime Minister Narendra Modi, who made fun of his predecessor’s reputation as an economist, most Indians just prayed for a miracle hoping against hope that Dr Singh’s predictions don’t come true. Among other things, Dr Singh had also warned that ‘the GDP of the country can decline by about 2 percentage points as a result of what has been done. This is an underestimate.’

A great visionary that he is, Dr Singh was right and most Indians were wrong when the GDP numbers were announced last week. India’s economy had indeed shrunk by 2 percent. One still wonders how an economist, even by Dr Singh’s standard, could be so spot on.

Dr Raghuram Rajan, the former Reserve Bank of India governor, said over the weekend that the slowdown in the Indian economy as a result of the note ban could be as worse as loss of Rs 2.5 lakh crore. Now that’s frightening.

Rajan had cautioned the government against cost of demonetisation and suggested that there were better alternatives to achieve the main goals of note ban.

In his book titled ‘I Do What I Do: On Reforms Rhetoric and Resolve’, Rajan, who was the governor between 2013 and 2016, had also warned of what would happen if the preparations for demonetisation were inadequate.

It’s not surprising why the Congress party has sharpened its attack on Modi while calling demonetisation a “Modi Made Disaster” and asked him to introspect whether he has moral right to continue after causing harm to India’s economy and decimating it by over Rs 3 lakh crore.

Congress incharge of communication Randeep Surjewala also asked the prime minister to apologise to the nation and hold an immediate inquiry into the alleged demonetisation “scam”.

He said the entire purpose of demonetisation stood defeated after the decision failed to achieve its objectives of curbing black money, fake currency, terror funding and digitisation of financial transactions.

“If morality has any basis in our polity, it is time for the Prime Minister to introspect and to think whether he has a moral right to continue in his office even for a day after decimating India’s economy by over Rs 3 lakh crore and causing damage to it,” he told reporters.

Surjewala also said, “He must apologise to the Nation. He must also order an immediate enquiry into the demonetisation scam.”

He said one thing is clear that the “disaster of demonetisation was nothing but ‘MMD’ ‘Modi Made Disaster'”.

He asked who is responsible for this ‘disaster’ in which India’s economy lost over Rs 3 lakh crore in which housewives lost their lives’ earnings, in which 15 lakh people lost their jobs, medium and small enterprises were forced to shut down and credibility of financial Institutions including Reserve Bank was put under question.

The Congress leader said that is why when former RBI Governor Raghuram Rajan showed the mirror of truth to the Prime Minister and the BJP government, “it is time for the Prime Minister to introspect”.

Surjewala accused the Prime Minister to have “misled” this country and “lied” to the nation and asked him to introspect and think if he should remain in office.

In case you missed, here are the 10 commandments of Manmohan Singh emerging out of his speech in the parliament on 24 November;

  • It’s not my intention to pick bones in what one side says and what other sides says
  • I’m very sorry the RBI has been exposed to this kind of criticism, which is fully justified
  • The prime minister must come up with measures to reduce the distress
  • The way demonetisation has been implemented, it will hurt agritural growth
  • Not good for country’s image, when people have deposited their own money but can’t withdraw
  • PM has asked us to wait for 50 days, but even 50 days are torturous for people. 60-65 people have died
  • In the process of demonetisation, monumental mismanagament has taken place. No disagreements in the country on this
  • The GDP of the country can decline by about 2 percentage pts as a result of what has been done. This is an underestimate
  • I would like to point out, that in my opinion, this scheme, the way it is implemented will hurt small industry & will hurt all those people who are in the informal sector of the economy.
  • This alone is enough to condemn what has been done in the name of greater good for the people

 

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