While addressing governors and lieutenant-governors through videoconferencing from Rashtrapati Bhavan on Thursday, President Pranab Mukherjee could have avoided getting into overtly political territory a month before major state elections are due. Speaking directly on the question of demonetisation for the first time, the President warned the measure may lead to a “temporary” slowdown of the economy, and may also “hurt” the poor, suggesting the government offer them relief urgently as he wasn’t “too sure (they) can wait”. “Temporary” is too vague an expression, and brought no fresh insights to the discussion.
Even an eminent economist like Prof. Jagdish Bhagwati, an arch supporter of this government, concedes that economic dislocation is the likely outcome although he hesitated to use expressions like “short-term”, the most approximate equivalent of “temporary”. In the worst scenario, the damage can last longer, though we hope that won’t be the case.
Former PM Manmohan Singh, himself an internationally-acknowledged economist, spoke of at least a two per cent fall in growth in the current year. He too shied away from speaking of how long the negative impact might be felt.
The Reserve Bank, the country’s monetary authority, it may be noted, has generally refrained from any comment on demonetisation, although it perhaps should have to offer the country perspective. Its silence has been read as owing to political considerations.
On Thursday, the RBI noted no authoritative exercise has been done to gauge what proportion of currency notes had come back to the banks after demonetisation. This was in response to the widespread speculation that 97 per cent of the total may have been returned by the public.
This discussion is in the context of both common sense and politics. If nearly all currency notes of high value are back with the banks, where is the black money within the country, and what was the point of demonetisation?
In such a fraught context, Mr Mukherjee could have just allowed the matter to rest as nothing new was being said. But by bringing up his thoughts, he may have opened himself to the suggestion of being on one side of the demonetisation fence or the other.
This is specially so as the President noted demonetisation may have led to a temporary slowdown of the economy “while immobilising black money and fighting corruption”. Alas, while there is evidence for the first part of the observation, so far there’s none for the latter part as no signs are yet available of corruption being checked or black money being immobilised.
When the Rashtrapati speaks, it must be to offer counsel to the government and the country. That is not only his constitutional obligation but the duty of the First Citizen, whose office is an integral part of Parliament.
