Connect with us

Interview Niti Aayog’s Bibek Debroy: Demonetisation was for institutional cleansing

Published

on

Bibek Debroy
Bibek Debroy during an interview with IANS in New Delhi. (Photo: Bidesh Manna/IANS)

New Delhi, Nov 9: NITI Ayog member Bibek Debroy admits that demonetisation was a temporary shock on growth but asserts that the economy has now climbed back. One year into the disruptive note ban, Prime Minister Narendra Modi’s economic policy adviser says the worst is over and there are signs that things are improving now.

He also says demonetisation should not be seen through a narrow cost-benefit calculus but as a move aimed at “institutional cleansing”.

“Yes, there has been a dip, but followed by a climb back. If you look at the data, there has been a slowdown in the growth rate continuously. I have not seen any data, even remotely statistical, which suggests that demonetisation has led to a more than temporary shock in terms of growth or employment,” Debroy, who heads the Economic Advisory Council revived recently by the Prime Minister, told IANS in an interview.

Debroy said demonetisation should not be looked at only from an economic perspective.

“If I evaluate it with a narrow economic cost-benefit calculus, I think that would be unfair, because the intention (behind the move) was not narrow economics,” Debroy said. The decision was aimed at institutional cleansing. “How do I even quantify and measure it?”

“If I look at it only with that economic lens, I will evaluate the costs and the benefits in a certain way. If I look at it with a political-economic kind of lens of cleansing up the system, I will evaluate it in a slightly different way.”

Debroy said that purely in terms of economics, one will not have to wait too long as some data, like that of direct tax collections, would come out soon which would reflect demonetisation and help understand its implications.

There was “excessively high” prevalence of cash in the system till last year and cash-to-GDP ratio has now sharply declined by almost one-third post-demonetisation, he said.

Debroy said that before demonetisation, the cash-to-GDP ratio in India was almost 13 per cent. “That’s excessive. It has now come down to a little over nine per cent,” Debroy noted.

“A lot of the cash in India was excessive and was not yielding returns to the person who held the cash, nor was it performing the role that money performs as a multiplier.”

“I’m not comparing with developed countries but even if you compare with other countries in South Asia, India had too much cash,” he said.

As per estimates, the cash-to-GDP ratio was 5.8 per cent in Bangladesh, 3.5 per cent in Sri Lanka and 9.3 per cent in Pakistan in 2015, whereas in India it was 13 per cent.

“That excessive cash has now vanished. The money has now come into the banking system. But that does not necessarily legitimise that money. You have to subject yourself to further scrutiny,” Debroy said.

Debroy has come out with a compilation, “On the Trail of the Black”, along with his colleague Kishore Arun Desai, with contributions from several writers tracing the prevalence of corruption and evaluating its impact on society and the economy.

He admitted that every decision related to the demonetisation exercise might not have been perfect.

“But we know that with the benefit of hindsight…. and this kind of thing had never been attempted before,” he said.

Read more…Bollywood’s organised sections escaped impact, but daily wagers suffered

He said the biggest challenge in implementing the demonetisation decision was to maintain the surprise element which was crucial.

Kishore Arun Desai, who edited the book along with Debroy, said the war against corruption was a work in progress and November 8, 2016, should not be looked at in isolation.

“We’re talking a lot about November 8, but there are a series of actions that the government has been taking ever since coming to power, starting with setting up an SIT on black money, followed by the Benami Transactions Act, an act for transparent auction of coal mines, the Income Declaration Scheme, the RERA Act and the Jan Dhan Yojana.

“We have been witnessing the overall intent of the government of cleaning up the economy across various sectors and demonetisation was just a trigger and one of the boldest steps,” Desai told IANS.

IANS

World

Pentagon to establish ‘Space Command’

Published

on

Hack the Pentagon

Washington, Dec 18: While the Space Force would need congressional approval but US President Donald Trump issued an order on Tuesday directing the establishment of a “Space Command.”

Vice President Pence announced on Tuesday that the White House had directed the Pentagon to form a Space Command, a significant step toward the administration’s ultimate goal of establishing a department known as the Space Force that would become the first new branch of the Armed Services since the Air Force was created in 1947.

Trump said the new command will be created as a “unified combatant command” that will oversee all US military activities in space, according to his memo to Defence Secretary Jim Mattis.

The president has asked Mattis to recommend officers for the command’s leadership, the one-page memo said.

It added that a comprehensive list of authorities and responsibilities for the Space Command will be included in the next update to the Unified Command Plan.

Trump has been pushing to establish a Space Force by 2020, an idea that has been questioned by Pentagon officials and military experts worried about adding cost and bureaucracy.

 

Pence was speaking at the Kennedy Space Center in Cape Canaveral, Florida, where he was to watch the launch of a SpaceX rocket with a military cargo.

 

Continue Reading

Cities

BJP candidate sent to jail for assaulting youth who voted for Congress candidate

Published

on

Jail

Bhopal, Dec 18 : Sudhir Yadav,BJP candidate from Surkhi assembly constituency of Sagar district in Madhya Pradesh,was sent to jail today under SC/ST (Prevention of Atrocities) Act.

He had allegedly abused and physically assaulted a youth who voted for Congress candidate in the state assembly elections.Yadav is the son of BJP MP from Sagar Lok Sabha seat Laxmi Narayan Yadav, was booked by the AJK police station in Sagar under Sections 294, 323, 506 and 34 of IPC, besides different sections of the SC/ST Act for allegedly abusing and assaulting 22-year-old Dalit man Deepesh Ahirwar outside the polling booth in Berkhedi Sadak area of Surkhi assembly constituency on the polling day.

In the complaint submitted to the AJK police station , Ahirwar alleged that after exercising franchise in the polls on November 28, when he came out of the polling booth, the BJP candidate Sudhir Yadav was standing outside with his  supporters.”Yadav asked me who I had voted for and I told him that I voted for the Congress candidate. Hearing it the BJP candidate got infuriated and started abusing me and my caste. Yadav also thrashed me badly for voting the Congress candidate,” Ahirwar alleged in the complaint.

Continue Reading

India

All India Kisan Sabha to hold protests for loan waiver

AIKS will also extend its support to the protest march of ex-servicemen fighting for One Rank One Pension (OROP) on January 27.

Published

on

New Delhi, Dec 18 : Buoyed by the announcement of farm loan waiver by Madhya Pradesh and Chhattisgarh governments, Left-affiliated All India Kisan Sabha (AIKS) on Tuesday said it will hold another round of protest in the rural parts of the country to press for a complete loan waiver across the country and guaranteed remunerative crop prices.AIKS will also extend its support to the protest march of ex-servicemen fighting for One Rank One Pension (OROP) on January 27.

AIKS General Secretary Hannan Mollah said that ‘rail roko’ and ‘rasta roko’ will be held in all villages to urge BJP-led central government to hike the Minimum Support Price (MSP) for agriculture commodities as per the recommendations of Swaminathan Commission and waive loans of all farmers in the country.

“The outcome of recently-concluded elections showed that farm crisis was one of the major issues. The Congress governments in Madhya Pradesh and Chhattisgarh have waived farm loan because of the protests this year,” he said addressing a press conference.

“We have decided to keep momentum going till Lok Sabha elections to get our demands fulfilled. As many as 106 organisations under the banner of Bhumi Adhikar Andolan will participate in the protest,” he said.

The planned protest would be separate from the ones being held by All India Kisan Sangharsh Coordination Committee (AIKSCC) which represents over 200 farm outfits and the AIKS is also a part of it, Mollah added.

AIKS President Ashok Dhawale said Congress “showed no mercy to the farmers” by offering a loan waiver but farmers protests compelled it to do so.

Madhya Pradesh Chief Minister Kamal Nath has announced signing off the file on crop loan waiver of up to Rs 2 lakh as on March 30 this year.

Dhawale demanded the cut-off date be extended to December so as to make farmers, who have taken loan this year, free from the cycle of debt completely.

The AIKS leaders asked Congress governments to implement the loan waiver scheme without riders.

“Loan waiver scheme with conditions was a bad experience in BJP-led Maharashtra. In another BJP-ruled state of Uttar Pradesh, farmers received cheques of Re 1. So there should not be any condition,” Dhawale said.

Newly elected MLAs from Rajasthan, Girdhari Lal Mahiya and Balwan Pooniya, who contested on Communist Party of India’s (Marxist) tickets, said they would take up the cause with the government to make farmers in the state debt-free.

Pooniya said farmers were “looted” by the Modi government under Pradhan Mantri Fasal Bima Yojana, a crop insurance scheme, as the premium was high but compensation was low.

Expressing concerns over Congress President Rahul Gandhi’s remarks that loan waiver was not a solution, Mahiya said “It is hypocrisy. We will have to confront the government in the Assembly and on the road.”

Reacting to the NITI Ayog’s remarks that loan waiver is no answer to the debt trap, Mollah said the premier institution had become a “chamcha” (sycophant) of the BJP government.

“It is good for nothing. It agrees with whatever the government says,” he said.

On former RBI governor Raghuram Rajan remarks over the loan waiver, Mollah said “We know that it is not a solution. However, farmers are under debt because of low remuneration. They have been incurring losses for so many years. Let there be one-time loan waiver along with an announcement of the MSP fixed on Swaminathan commission’s recommendations, farmers will not need a loan waiver again.”

AIKS leader said they would meet Union Agriculture Minister Radha Mohan Singh over agrarian crisis in the country.

Continue Reading
Advertisement

Most Popular