NEW DELHI: Criticizing Prime Minister’s Narendra Modi’s demonetization decision, former Chief Economic Advisor (CEA) Arvind Subramanian has called Demonetisation a “massive, draconian, monetary shock” that accelerated economic slide to 6.8% in the seven quarters after it against the 8% recorded prior to the note ban.
Breaking his silence on the November 8, 2016 decision of Prime Minister Narendra Modi, he says that he does not have a strongly-backed empirical view apart from the fact that the welfare costs, especially on the informal sector, were substantial.
He also speaks about the political aspect from that time, where the BJP won a stunning victory in Uttar Pradesh with the voters seemingly backing the stated goal of Demonetisation to curb black money and corruption. However, he added that demonetisation may have enabled more people to shift from cash transactions to payments through electronic means. Subramanian says this is not entirely convincing. After all, the collateral damage was, in fact, avoidable.
This article was first published on http://www.wakeuppost.com.