‘Note-ban impact: Economy will take two years to get back on growth path’

Former Finance Minister P Chidambaram on Sunday said the country’s economy has been adversely impacted and the people’s sentiment has taken a hit due to the ill-conceived demonetisation drive by the Narendra Modi- Government.

“It will take at least two years to get back to growth path again,” he said.

Speaking on ‘Demonetisation-A perspective’, here at a meeting hosted by the Telugu daily Mana Telangana , Chidambaram said, “The economy has been affected across sectors and if the current trends are any indication, the GDP growth is certain to be down by about one per cent. This will shave off about ₹1,50,000 crore from the economy.”

“The Indian economy was humming along and the demonetisation move announced on November 8 will have horrendous consequences. These include lower investments, poor investment sentiment, big chunk of small and medium enterprises getting closed, leading to job losses and daily wage earners being impacted due to the adverse impact on the system,” he explained.

The impact on the SMEs has been significant and a number of them have closed leading to job losses. About 45 crore men and women dependant on daily wages have been hit and the sentiment too has taken a big hit, he said.

The former Finance Minister said the Reserve Bank of India and various arms of the Government in the Finance Ministry have been kept in the dark about the process of demonetisation and there are no records to show how the whole process was approved and announced by the Prime Minister.

It only shows that the democratic process of taking such a decision was not followed, he felt.

He said while the demonetisation move has put the people to great hardship, its main objectives of curbing black money, fake currency and terrorist funding also seem to have not been achieved. All the ₹15,44,000 crore money in the form of ₹1,000 and ₹500 denomination notes in circulation (about 86 per cent of the total money in circulation) is back in the system.

He said the Government has been changing its stance over the past few weeks after demonetisation, referring it to as remonetisation, then cashless economy and later to less-cash economy. This only shows lack of clarity in implementing the the ill-conceived demonetisation drive.

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