‘Gold market, poll funding reforms next’

The Centre’s demonetisation move was part of a broader plan of institutional cleaning up, and will be followed up with initiatives targeting unaccounted for wealth not in cash form, according to Bibek Debroy, economist and member of NITI Aayog, the government’s think-tank. Addressing an event on Indian economy and the Union Budget, organised by Chennai International Centre (CIC), he asserted that the Centre’s move to remove ₹500 and ₹1,000 currency notes from circulation overnight was not meant to address the problem of creation of new black money. The demonetisation exercise should be seen from the lens of institutional cleansing, including election funding, he said, adding: “Things may not happen in a hurry, but it is at least part of that debate.”

There would be more action relating to gold markets (not jewellery), financing of some capital market transactions, real estate and electoral funding, he stated.

The importance of cash in India will not disappear overnight, observed Debroy. The use of cash is excessive, and some of that cash is not really required for GDP growth, he added.

Debroy also said the debate on financial inclusion is over, and there were enough non-government agency surveys to prove that. Now, the poor who have bank accounts don’t know that their plastic cards can be used for things other than withdrawals from ATMs. So there only is an issue of information dissemination or lack of financial products,” he added.

Stating that there are blueprints of reforms — be it in the Union Budget or remonetisation — he pointed out that the reforms will always be defined in terms of the country’s priority, not because the World Bank thinks they desirable.

COMMENT NOW