Kotak questions idea of 2K notes
■ Takes a dig at Niti Aayog ■ Book draws attention to note ban’s impact
New Delhi, Dec. 9: Amid raging controversy over the revised economic growth numbers, former chief economic advisor Arvind Subramanian has called for an investigation by experts to clear doubts and build confidence while noting that the “puzzle” about the data needs to be explained.
He stressed that institutions that do not have technical expertise in calculating the GDP data should not be involved in the process, apparently referring to the Niti Aayog.
Mr Subramanian, who criticised demonetisation in his new book titled ‘ Of Counsel: The Challenges of the Modi- Jaitley Economy’, was, however, evasive when asked if he was consulted in the decisionmaking process on note ban.
“As an economist, I think there are some puzzles ( new back series GDP data) there are some issues that need to be explained. Since there are things that need to be explained, we should, just to create confidence and eliminate any uncertainty or doubts, I think we should have experts who can investigate this thoroughly and give their answers,” Mr Subramanian told PTI.
On the controversy over the Niti Aayog’s presence at the release of the GDP back series data by the Central Statistics Office ( CSO) last month, he said that experts should have the main job of producing and explaining data.
“I think this ( calculation of GDP) is a very technical task and technical experts should do the task, institutions that don’t have technical expertise should not be involved in this,” he said.
Recalibrating data of past years using 2011- 12 as the base year instead of 2004- 05, the CSO last month lowered the country’s economic growth rate during the previous UPA’s regime.
Asked whether he was consulted in the decisionmaking process on demonetisation, the former CEA said, “In the book, I said that this is not a Kiss and Tell memoir, that is for gossip columnists.”
Referring to criticism that he did not speak on note ban when he was working for the government and now he is raising the issue to sell his book, Mr Subramanian said, “People will say whatever they say, right.”
“But through my new book, I was drawing attention to the puzzle, the big puzzle, 86 per cent reduction in cash ( after note ban) and yet the impact on the economy was much less,” he said.
The ex- CEA also wondered whether much less impact on the economy after demonetisation was due to current GDP calculation method.
“Is it ( less impact on the economy after note ban) because we are not measuring GDP correctly, or is it because our economy is very resilient,” Mr Subramanian who currently teaches at Harvard Mumbai, Dec. 9: The outcome of the controversial demonetisation would have been “significantly better” if “simple things” like not cancelling the higher denomination of ` 2,000 notes, Uday Kotak has said.
The executive vicechairman and managing director of the country’s fourth largest private sector lender Kotak Mahindra Bank has also said small businesses are in a difficult situation at present and has welcomed the government focus to revive the sector.
On demonetisation, he said the outcomes would have been different if it was planned well.
“I think we would have had significantly better outcomes, if we had just thought about simple things. If you are taking out ` 500 and ` 1,000 notes, why would you introduce ` 2,000 notes?” Mr Kotak asked while speaking at former CEA Arvind Subramanian’s book launch here over the weekend.
Mr Kotak said as part of the “execution” strategy, it was essential to ensure larger quantum of notes
Kennedy remarked.
In the six quarters before demonetisation, growth averaged 8 per cent and in the seven quarters after, it averaged about 6.8 per cent ( with a four- quarter window, the
School of the right denomination were made available.
If such things were undertaken, “we would have been talking very differently today than now,” he said.
But Mr Kotak claimed that for the financial sector, demonetisation has been a “huge boon”.
He said the growth in savings have been “unbelievable”, which has also led to a challenge of risk management.
On November 8, 2016, Narendra Modi surprised all by announcing a withdrawal of the ` 500 and ` 1,000 notes, claiming to curb black money and fake notes. But the final numbers have disproved all the calculations wrong as 99.3 percent of the cancelled notes worth close to ` 15.8 trillion has come back to the system. relevant numbers are 8.1 per cent before and 6.2 per cent after),” Arvind Subramanian wrote in the chapter “The Two Puzzles of Demonetisation — Political and Economic”.