Experts slam demonetisation, call it “huge act of stupidity”


Experts have condemned the demonetisation move by Prime Minister Narendra Modi calling it a huge act of stupidity as the supposed deadline comes to an end on 30 December.

Mohan Guruswamy, the head of Centre for Policy Alternatives told India Today channel that through the note ban announcement, the prime minister had committed a huge act of stupidity.

He said, “He’s committed a huge act of stupidity by landing us in this mess. And now he’s trying to wriggle out of it with new policies and new strings of policies he says he might do. And we will have to wait and see. But I think you are not going to recover what you’ve lost. If you’ve lost 2-3 % of the GDP, you’ve lost it, it’s gone. And that’s the cost of the demonetisation. Couldn’t we have done better? What was the hurry?”

Meera Sanyal, a former banker of eminence, said, “I think we need to move away from the rhetoric into real numbers because a lot of this is emotional speeches etc. Let’s talk about the objective of this move. The plan was that the black money would be tackled. The black money would get extinguished..We would like to know from the finance minister is how much money has been deposited back into the banks. We’ve not had any estimates of that now for several weeks. Question number 2. How much money has come under the Prime Minister’s Garib Kalyan Yojna? Because these two numbers will give us the estimate of actually how much black money was extinguished.”

These sentiments by experts came on the day Finance Minister Arun Jaitley sought to assure that the worst part of the demonetisation was ‘behind us.’

He said, “Of course, there would be areas which would be adversely impacted but what was predicted by the critics has to have rationale with the revenue collection. Assessment can be unreal but revenue is real.

“And therefore, many of these indicate that now with the critical part of the remonetisation already behind us and there being significant impact in large number of these areas, it should certainly be much better in weeks and months to come than it was in last six weeks.”

Asked if there a conscious attempt to reduce the currency in circulation while remonetising, he said RBI will take that decision after assessing the requirements of the market.

“But obviously one of the intentions as far as government of India is concerned that the paper currency should shrink and a large part of businesses in the alternative digital or cheque mode. Considering the very large increase in digital users that have taken place, we seem to be moving in the right direction,” he said.

He acknowledged that there could have been some adverse impact for a quarter or so.

By Thursday evening, one of Modi government’s key ministers, Venkaiah Naidu was publicly confessing that the prime minister’s much-publicised 50-day deadline may have been another jumla after all.

Naidu said that some normalcy may be achieved only by the middle of January but he couldn’t give a firm commitment even on a new deadline.

Naidu’s comments aside, Indian Express reported earlier this week how the RBI had shortlisted four foreign companies to supply the additional currency papers for the deferal bank to meet the new demand for printing new notes.

According to the report, the RBI is in desperate need of 27,500 metric tonnes of paper for lower denomination currency notes and that can only be supplied to India only between April-December 2017.