People will find ways around note ban, use 'jugad' for black money: Rajan

Mumbai: While his book ‘I Do What I Do’ has been creating quite a stir, former RBI governor Raghuram Rajan on Thursday added to his opinion on demonetisation by saying people in India know how to do ‘jugaad’ and get around the system.

In a freewheeling interview with NDTV, the economist opened up to a host of questions, including why his tenure ended. “The term came to an end, it did not get renewed. That’s where it ended,” he said. However, he hinted that he may have been open to staying on given that he had spearheaded the cleaning up of bad bank loans and felt he had a sense of how to ‘carry it through’.

Rajan, who broke his silence months with his book, months after his controversial resignation from the central bank, earlier said that he had cautioned the government about the ill effect of note ban that would “outweigh” the long-term benefits. On being asked, how he felt that would happen he said ”If you are not prepared with the new currency that is to replace the scrapped currency.. it would be chilling the economic activity, there would be a dramatic slowdown”.

Considering Modi’s note ban move was aimed at destroying black money hoarders, Rajan further went on to say that the worst scenario would be if the “bad guys” were not caught and the move still continues to affect the economy adversely. “People in India are pretty good at jugad..if you know India well, you should know people will find ways around it,” he said.

However, he said that by not being able to catch the “bad guys” and putting that black money back in the system, these “guys” are now earning interest. He went on to point out that it was one of the reasons the RBI dividend went down this year.

He also lauded the linking of Aadhaar with bank accounts, as a measure of increasing of the tax base. He felt, it was a gentler way of approaching tax base, without hurting the economy.