The former Chief Economic Advisor (CEA) Arvind Subramanian has reportedly devoted an entire chapter to demonetisation in his soon-to-be-released book, “Of Counsel: The Challenges of the Modi-Jaitley Economy. “He has finally voiced his opinion about the demonetisation move that shook the country at a grand level, calling it “a massive, draconian, monetary shock”, IANS reported.
He is not the first and definitely not the last person to speak about the Prime Mister’s shocking announcement. Prime Minister Modi’s unforeseen move to ban the (old) current notes of 500 and 1000 saw nearly 86 per cent of the currency in circulation at the time being invalidated overnight.
“In one fell swoop, 86 percent of the currency in circulation was withdrawn. The real GDP growth was affected by the demonetisation. Growth had been slowing even before, but after demonetisation, the slide accelerated,” write Subramanian in the chapter titled The Two Puzzles of Demonetisation – Political and Economic.
Breaking his silence on note ban, former CEC Arvind Subramanian said, “Demonetisation was a massive, draconian, monetary shock: In one fell swoop, 86 per cent of the currency in circulation was withdrawn.”https://t.co/Xx8vv4v4QR
— TIMES NOW (@TimesNow) November 29, 2018
Subramanian provides the reader with an inside account of his rollercoaster journey as the CEA to the government of India from 2014 to 2018. While he claims not to have a strongly-backed empirical view he points to the fact that the welfare costs, especially on the informal sector, were substantial.
Subramanian, who succeeded former RBI Governor Raghuram Rajan as CEA, said that nobody is in doubt that demonetisation slowed the economy of the country down, and goes on to attempt to quantify the slowdown — whether it was 2% or more than that. He also talks about other factors from the time that had played an important role in GDP growth slowing down, such as GST implementation, oil prices and higher interest rates.