IMF must be abolished, says demonetisation supporter Jagdish Bhagwati after India growth forecast cut

Jagdish Bhagwati was in no mood to spare IMF for making terrible forecasts, and even lambasted the World Bank.

Shortly after International Monetary Fund cut India’s current fiscal 2017-18 economic growth estimate by as much as 50 basis points owing to demonetisation and GST, noted economist Jagdish Bhagwati rubbished the forecast saying that the institution must be abolished. “IMF should be abolished. They consistently make terrible forecasts,” Jagdish Bhagwati said in an interview to ET Now in New York.

Earlier yesterday, International Monetary Fund cut India’s FY18 economic growth forecast to 6.7%, even while boosting global growth outlook by 10 basis points. Further, IMF cut India’s growth forecast for the next year 2018-19 by 30 basis points to 7.4% due to the lingering effects of disruption caused by demonetisation and transition costs of GST. However, IMF also said that GST and other reforms could push India’s growth to above 8% in the medium term.

But Jagdish Bhagwati was in no mood to spare IMF, and even lambasted the World Bank. “I think the IMF, World Bank… we should get rid of these institutions from India. Why should we be going for… what are these institutions doing in India in the first place,” he said, adding that India is a very successful country, which doesn’t need “those guys coming in with very little knowledge”.

Jagdish Bhagwati, an open supporter of Narendra Modi’s decision of demonetisation, also once again lashed out at Nobel laureate economist Amartya Sen for reportedly questioning if the note ban move was democratic or not, FirstPost reported from New York. In a hard-hitting attack, Jagdish Bhagwati termed Amartya Sen as fool and said that he had rushed in and expressed his opinion without taking public view, FirstPost reported.

Jagdish Bhagwati reiterated his own support for demonetisation. “I was one of the people, and so was (Arvind) Panagariya, who said that actually, demonetisation might lead to an uplift of the economy, not a downturn,” he said, explaining that a lot of money which was just sitting in the shelves — black money — would come out. The inactive money, which was inactivated, would mean that the demand goes up in the economy, Jagdish Bhagwati added.

Regarding the instances of people converting their money with the help of others, Jagdish Bhagwati said that it was mostly expected. “You find some way… may be your servant or someone, you give them 30%, and he waits in the queue and converts it. So a lot of that we had expected,” he said.

Further, the economist also said that his own interaction with people had suggested that there was a widespread public support for the move. “I also thought there would be no repercussions as far as the Prime Minister was concerned, if it was negative. Because I had done my own gallup poll, which was really asking waiters and taxi drivers, and everyone was saying — he’s our Prime Minister,” he said.