The cost of demonetisation has been paid in last eight months but benefits will be felt over the long term, former RBI governor D Subbarao said today. “Everybody agrees upon the costs of demonetisation. These were for the short term, while the benefits will be felt in the long term”, Subbarao said at the second foundation anniversary of Bandhan Bank.
In the last eight months, the costs of demonetisation had been paid, he said. “Thousands of jobs were lost, patients could not receive treatment, people had to stand in long lines. There had been a lot of pain,” Subbarao said.
All these could not be quantified though, he said adding that it was seen that the fourth quarter of the last fiscal’s GDP had suffered a substantial blow. “The benefits depends on the objectives. The objectives must have been choking black money generation, digitisation drive and dismantle counterfeiting of money,” he said.
However, the drive towards digitalisation does not necessarily require demonetisation and can be done without it, he said. The benefits would also accrue from the rise of the share of Income Tax in the GDP, he said.