Regarding the same he had tweeted that the economics of demonetisation was complex and that the collateral damage was likely to far outstrip its benefits.
Speaking upon PM Narendra Modi’s demonetisation move, India’s former Chief Economic Advisor and former chief economist of the World Bank, Kaushik Basu has discouraged the government saying that the economy would take a turn for the worse in the coming year, besides greater suffering for the people in the days to come. He also said that a new form of corruption in the wake of the withdrawal of old Rs 500 and Rs 1,000 notes.
Basu, from the day demonetisation was announced, had been adamantly inverse towards the note ban. Regarding the same he had tweeted that the economics of demonetisation was complex and that the collateral damage was likely to far outstrip its benefits, joining a growing number of those who have slammed the government’s decision, including former Prime Minister Manmohan Singh.
As per his prediction, the currency dearth will no ease any time in the near future. Close to Rs 12 lakh crore has already come into the banking system of the total high value notes in circulation of around Rs 15 lakh crore, The Indian Express quoted him saying.
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Hitting the centre on its demonetisation drive, he further said that, “it’s a wrong step with design flaws … that needs to be corrected. It’s hurting people which are not the intended target.”
Basu also cited the example of the only other precedence of demonetisation in the country in 1978. While it was a ‘small demonetisation’ as only the Rs 1000 notes were demonetised, the following year was when independent India had the worst growth. “In 1979-80, India grew by -5.2 percent… Maybe there was some role to be played by the demonetisation,” said Basu adding that interfering with the law of the market was not good for the economy.