Bibek Debroy, economist and a member of Niti Aayog on Thursday spoke about the much-debated demonetisation drive and said that the event of November 8, 2016, was a part of a major set of measures planned by the government. He said that it has to be scrutinised whether the entirety of money that had come back was legitimate. Speaking to ET Now, he said that the money that had come back into the system had to be legitimised. Speaking of the money that had come back into the system he said that Rs 3 lakh crore was not the only metric of success as far as the demonetisation drive was concerned. Demonetisation was one of the many measures to tackle black money, he added. He also said that the money which was outside the tax net was being forced to get into the tax net. Although, there was still a danger of ‘Inspector Raj’ being unleashed at lower levels.
Speaking about the impact of demonetisation on the Indian economy, he said that nobody had any data to access the actual impact of demonetisation on the GDP. Although, it would have an impact on the GDP in the Q3 of the financial year 2017. He did not agree that the demand had been crippled due to demonetisation. He referred to the Consumer Optimism Survey and said that there had been no decline in the consumer demand post-November 8. Although, he admitted that there were certain disincentives in the use of non-cash methods. He said that nobody could shift to a cashless system overnight.
He said that the money that doesn’t come back to the system was a reduction in the liabilities of the RBI and the central bank could not deny the exchange of money as opposed to a commercial bank. he said that the extent to which people had misused the exchange channel had not been anticipated. Although, queues in front of banks and ATMs have reduced as compared to the early days after the announcement of demonetisation, he added.
