At a time when the world economy was growing, Demonetisation slowed down India’s economic growth and impacted the GDP significantly, former Reserve Bank of India (RBI) Governor Raghuram Rajan had said in an interview with NDTV.
Rajan said he saw studies which reaffirmed that banning of high-value current in late 2016 strongly affected India’s growth. “I think the net impression is that it (demonetisation) had a significant effect on our growth. And now, I have seen studies which reaffirm that. It has slowed down (our growth).
“…the world (economy) was growing faster in 2017, we slowed down,” the former RBI Governor said.
Rajan further added that the implementation of Goods and Services Tax (GST) also had an impact on the country’s economic growth.
“That was the twin blow of demonetisation and GST (that impacted India’s growth). And before anybody accuses (me) of being anti-GST, it’s a good idea in the longer run, but it has a short-term teething effect,” Rajan noted.
When questioned if he was asked to implement demonetisation during his tenure as the RBI Governor, Rajan acknowledged he was asked for his opinion which he thought was a “bad idea.”
Further expressing his views on GST, he said that the tax system could have been implemented in a much better manner and that “it is a matter of debate” whether GST should have one rate instead of five different slabs.
Speaking on bad loans and fraudsters, Rajan said that he had a list of the largest frauds which was sent to the PMO. “I’m unaware of where those cases stand….The reason I’m worried is if one gets away with immunity then others may follow,” he said on the list of fraud cases he had flagged to the Prime Minister’s office.
“The RBI set up a fraud monitoring cell when I was Governor to coordinate the early reporting of fraud cases to the investigative agencies. I also sent a list of high profile cases to the PMO urging that we coordinate action to bring in at least one or two to book. I am not aware of progress on this front. This is a matter that should be addressed with urgency,” Rajan has said in his report earlier.
He also said that a defaulter is different from a fraudster. “If you start putting defaulters in jail then nobody will take any risk,” Rajan added.
Raghuram Rajan headed the Reserve Bank for three years till September 2016.