One year of demonetisation: Acknowledge the ‘blunder’ and seek support for rebuilding economy, Manmohan Singh tells PM Modi

It is time the Prime Minister graciously acknowledges the blunder and seeks support from all to rebuild our economy: Manmohan Singh tells PM Modi. (Express Photo)

With the Narendra Modi-led government gearing up to observe “Anti-Black Money Day” to mark the first anniversary of demonetisation, former Prime Minister Manmohan Singh has called upon his successor to “graciously acknowledge the blunder” and said the country should be placed above all politics with an intention of reviving the economy.

“I strongly feel the time for politicking over demonetisation is over. It is time the Prime Minister graciously acknowledges the blunder and seeks support from all to rebuild our economy,” Singh said in an exclusive interview to BloombergQuint.

Reiterating his criticism of demonetisation, the noted economist stated that the impact of the exercise has been multiple-fold, insisting that the effect on the weaker sections of the society is far more damaging than any economic indicator can reveal.

“Demonetisation has proved to be a catastrophic economic policy. The damage it has caused has been multiple fold – economic, social, reputational and institutional. Slowing GDP is merely one indicator of the economic damage. Its impact on the weaker sections of our society and business is far more damaging than any economic indicator can reveal,” Singh said, while pointing out the immediate effects of note ban was small and medium enterprises sector.

Singh also believes that the demonetisation could further aggravate the already rising inequality in the economy. “Headline GDP may well start to show an improvement after the recent lows. But rising inequality has been a constant threat to our nature of economic development. Demonetisation may exacerbate such inequalities which can be harder to rectify in the future. In such a diverse country such as ours, inequality can prove to be a far greater social malaise than in other homogeneous nations,” he stated, while describing demonetisation as a “thoughtless policy” and a “monumental blunder”.

Although Singh termed reduction of cash-based transactions and digital payments as “laudable pursuits” of demonetisation, the veteran Congress leader stressed that “we also need to get our economic priorities right. It is unclear that these goals of cashless economy will indeed help small enterprises become larger and achieve scale efficiencies. That should be our priority”.