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Demonetisation is an investment: Swaminathan Gurumurthy

He blamed the lack of coordination among the officials and said their's and RBI's insensitivity had dealt a blow to the demonetisation.

CHENNAI: Demonetisation is an investment that has accrued numerous benefits, especially in the prevention of investing black money in stocks, gold or land. It would have worked wonders had income disclosure scheme was allowed along with demonetisation, Swaminathan Gurumurthy, well known economic and political commentator, has expressed.

Contending that demonetisation was inevitable, he said it has helped to bring huge sums of unmonitored cash back into the monitoring system. “Many including the media expected an unrest (due to the implementation of demonetisation). But people cooperated and they didn't revolt. This showed their support to the bold initiative of Prime Minister Narendra Modi,” he said while delivering a lecture on “Demonetisation — its role, impact and follow up,” at the Madras School of Economics here on Friday evening.

He blamed the lack of coordination among the officials and said their’s and RBI’s “insensitivity” had dealt a blow to the demonetisation. “The freezing of the Mudra, ignoring the plight of the agriculture and small and micro industries has been a setback,” he added.

While demonetisation is an investment and has been a huge success, the GST is very ambitious. India's economic rise is on Indian foundation unlike rest.

Mr. Gurumurthy said that what led to demonetisation was the unprecedented rise in the circulation of high-value notes from Rs 1.5 lakh crore in 2004 to almost Rs 15.5 lakh crore when the drive was announced by Prime Minister Modi on 8 November 2016. With the increase in share of high value notes in the total currency in circulation from 34 per cent to over 88 per cent came steep rise in gold, stock and land prices, which rose almost 10 times in the six years from 2004 to 2010 as compared the previous five years, 1999-2004.

“It did not need a seer to say that the hyper GDP growth (8.6 per cent) in the latter six years (2004 to 2010) was just wealth-led growth – a mirage that yielded neither jobs nor gave external or internal comfort to the economy. The reason for this spurious growth clearly was the high asset prices, which were fueled only by an unprecedented rise in high-denomination notes,” Gurumurthy said and emphasised that one of the aim of the demonetisation drive was to puncture this massive buildup of high-denomination cash stock.

He also called for a “relook” at the NPA rules that were “badly drafted” and “carbon copied from the west” and argued that banks should not be privatised.

( Source : Deccan Chronicle. )
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