STATING THAT the demonetisation of 500 and 1,000 rupee notes was authored “by people who lack elementary knowledge of economics”, former Finance Minister P Chidambaram called the move a “monumental tragedy”.
“Whoever planted the idea of demonetisation should enroll in a graduate school of economics,” said Chidambaram at the University of Mumbai Tuesday. The former minister, who inaugurated the Prof D T Lakdawala lecture series at the university with a talk on ‘Twenty five years of Economic Reforms and Challenges Ahead’, told students that the Modi government’s move was not an economic reform but a “man-made tragedy”.
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The senior Congress leader said as long as there was a demand for black money, it would continue to be generated. “All cash is not black money and all black money is not cash,” he said, adding that black money was not a stock but a flow.
Stating that it was therefore more important to stamp out corruption and sources or sectors generating black money including construction, jewellery and licencing, he said the only two situations where demonetisation of currency would be advisable were in a situation of hyperinflation or currency instability.
Chidambaram also said that the current GDP estimates were flawed and therefore the number 7-7.5 per cent did not reflect the true growth rate. “Credit growth, investment, stalled projects, those are real numbers. Looking at those numbers, my gut feeling is that we are growing on a comparable basis at a rate of 5-5.5 per cent a year,” he said.
On the challenges ahead, the senior Congress leader said the passage of Goods and Services Tax Bill was important as was the regulation of Direct Taxes. He emphasised on universal healthcare.