Recently, in a “The Hindu” column, former Prime Minister and renowned economist, Manmohan Singh has tried to bring in notice some crucial points on demonetisation move of Modi government. It started with a startling and hefty title, “Making of a mammoth tragedy”. The title is carefully chosen to make an average Indian enough worried. Trying to keep his article separated from the political agendas, he has tried to justify the statements of former RBI governor, who showed major concerns about unfavourable impacts of demonetisation on poor section.
In spite of just throwing refusals on the demonetisation, he started his piece with applauding Modi for his socio-political intentions. He initially mentioned all the demons (black money, fake currency) which will be collapsed by demonetisation, and later on pointed at “unintended consequences” of the policy which may affect the poor section greatly. He mentioned it like, ” All black money is not in cash, only a tiny fraction is. Against this backdrop, the decision by the Prime Minister is bound to have obverse implications by causing grievous injury to the honest Indian who earns his/her wages in cash and a mere rap on the knuckles to the dishonest black money hoarder.”
Singh talked and emphasised the 2 percent fall in GDP after demonetisation and in the end of his article mentioned that, ” It is my humble opinion that we as a nation should brace ourselves for a tough period over the coming months, needlessly so.”
Although , he has mentioned all concerning point, but it is difficult to say if this is just an overstatement on the temporary hardships caused by demonetisation or it’s an eye of an economist that is causing him to write on the topic.
This short period of post demonetisation has not revealed much of impacts of the policy. The short-term indications are telling a victory story for the economy but the long term plans are yet to be discovered.
We cannot point out a bad finger on the thoughts behind demonetisation, but still a cost-benefit analysis has to be figured out.
