The Indian government conducted the demonetisation exercise in a poor way and it is not sure if the measure was taken for the right reasons, says renowned South Korean development economist Ha-Joon Chang.
“I am not against monetary reforms.. but demonetisation was conducted in a poor way. Usually if you take out a huge chunk of the money supply, you should have the replacement ready, but this was not done,” Chang, currently a reader in the Political Economy of Development at Cambridge, told IANS on the sidelines of the Jaipur Literature Festival here on Saturday.
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India is not Britain or France where everyone has a credit card and since there is a huge volume of cash transactions, this should have been kept in mind, he added.
“Monetary reforms are done to deal with conditions of hyper-inflation and corruption among others. But I don’t know the reasons for the step in India and am not sure whether they were the right reasons,” said Chang, who in his books like “Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism”, “23 Things They Don’t Tell You About Capitalism” and “Economics: The User’s Guide”, seeks to focus on the double standards followed by the developed nations and international lending institutions on free trade and markets and debunk economic myths.
The Narendra Modi government’s November 8 decision to demonetise the Rs 1,000 and Rs 500 currency notes triggered a cash crunch in India. Prime Minister Modi had said then that the measure was being taken to tackle the menace of black money, counterfeit currency and terrorism.