Modi should accept note ban blunder, says Manmohan

NEW DELHI: Former Prime Minister Manmohan Singh on Monday said the impact of demonetisation on the weaker sections of our society and business is far more damaging than any economic indicator can reveal and called on his successor, PM Narendra Modi, to acknowledge the blunder, just two days before the demonetisation anniversary on November 8.

Singh, a renowned economist, in an interview with a website, said the government must get its priorities right and work towards rebuilding the economy now. “The time for politicking is over,” he said.

Terming demonetisation as an attack on the independence and credibility of RBI as an institution, he also expressed fears that it pointed to a larger trend of erosion of institutions in other spheres as well.

He said that the effort to reduce cash-based transactions and to curb black money might have been “laudable pursuits,” but said that the means to this end are as important as the end itself. Singh said these goals cannot be achieved “through coercion or threats or raids which can be counter-productive”.

“It is unclear that these goals of the cashless economy will indeed help small enterprises become larger and achieve scale efficiencies. That should be our priority,” he said.

On the government’s efforts to formalise the informal economy through measures such as Goods and Services Tax, he said that any move to widen the tax base should be welcomed but warned that in its current implementation, GST threatens to derail the informal sector entirely. According to estimates, the informal sector contributes as much as 40 percent to the Indian economy.