After the groundbreaking implementation of demonetization, Indians of all age and group are torn between the ill effects and the benefits of the concept. The economists, bankers, politicians of the country have shared their much valued opinions on this action taken by current Prime Minister Narendra Modi.
PM Modi seems to have created a good trap for tax dodgers and black money hoarders by removing 500 and 1000 rupee notes, although the cost of taking 86% of the banknotes out of circulation overnight is being questioned.
Nobel Laureate economist Amartya Sen took to the promise written on a currency note and posed that as a hypocritical notion by the Government towards its people: “By taking despotic action and saying we had promised but won’t fulfil our promise, you hit at the root of this”.
He has gone on to call the Indian Government “authoritarian”, and has added that it is “calmly causing misery to the people with millions of innocent people being deprived of their money and being subjected to suffering, inconvenience and indignity in trying to get their own money back.”
Former PM, Finance Minister and economist Manmohan Singh has described demonetization as a “monumental management failure”. He said that due to such implementation, the GDP would fall by at least 2.5% and affect agriculture, small businesses and informal sectors adversely.
India’s premier investment bank and equity research firm Ambit Capital has predicted that the GDP growth in financial year 2017-2018 will slow down by a margin of 6.4%. Ambit Capital also expects a ‘formalisation effect’ as almost 50% of the non taxpaying informal sector holders will become unfeasibleand surrender their market share to the organized sectors.
Celebrated businessman Ratan Tata had a more rational approach towards demonetization. Although he termed it as a ‘bold’ action as that would help remove black money and corruption in the bigger picture, he stressed on the adversities that would be imminently faced by the common man. He rightly pointed out that people would face difficulties in situations of medical emergencies and for daily household needs due to dearth of cash. He also requested the Government to take special relief measures for the common people who constitute a major part of the economy.
Former Deputy Chairman of Planning Commission of India, Montek Singh Ahluwalia is of the opinion that there will be more of an impact on employment than on GDP decline, which in turn shall affect consumption and production creating a ripple effect. He also expressed his concerns on the cash crunch faced by 86% of the population and informal business sectors.
If not a concrete conclusion is arrived at, the pros and cons of demonetization can be summarized. Perhaps, only time will tell where the economy of India is headed: for the better or for the worse!