Former prime minister Manmohan Singh today shared his scathing assessment of demonetisation as intense political sparring between the government and the opposition marked the second anniversary of the cash ban. “It is often said that time is a great healer. But unfortunately, in the case of demonetisation, the scars and wounds of demonetisation are only getting more visible with time,” he said in a statement.
“I urge the government to restore certainty and visibility in economic policies. Today is a day to remember how economic misadventures can roil the nation for a long time and understand that economic policymaking should be handled with thought and care,” said the former prime minister.
Finance Minister Arun Jaitley, in a strong defence posted on Facebook, called the notes ban a “key step in a chain of important decisions taken by the government to formalize the economy”. The cash ban had also made it difficult to evade taxes, pushed digital transactions and helped improve tax collection, he said.
Manmohan Singh, calling Prime Minister Narendra Modi’s overnight ban on Rs 500 and 1,000 notes on November 8, 2016, an “ill-fated and ill-thought exercise”, said “the havoc it unleashed on the Indian economy and society is now evident to everyone.” The cash ban, he said, impacted every single person, regardless of age, gender, religion, occupation or creed.
“Beyond the steep drop in headline GDP growth numbers after demonetisation, the deeper ramifications of notebandi are still unraveling. Small and medium businesses that are the cornerstone of India’s economy are yet to recover from the demonetisation shock,” said the former prime minister, who is a noted economist.
“This has had a direct impact on employment as the economy continues to struggle to create enough new jobs for our youth. The financial markets are volatile as the liquidity crisis wrought by demonetisation is taking its eventual toll on infrastructure lenders and non-bank financial services firms. We are yet to understand and experience the full impact of the demonetisation exercise. With a depreciating currency and rising global oil prices, macro-economic headwinds are also starting to blow now.”
Dr Singh, who ruled India for 10 years till his party Congress was voted out of power in 2014, advised that it was “prudent to not resort to further unorthodox, short-term economic measures” that could cause any more uncertainty in the economy and financial markets.
The Congress has said that PM Modi should apologise to the nation for “wrecking the economy and causing its people untold hardships”.