Deeper ramifications of note ban still unravelling: Manmohan

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SME Times News Bureau | 08 Nov, 2018
Holding demonetisation an "ill-fated" and "ill-thought" exercise, former Prime Minister Manmohan Singh on Thursday said the scars and wounds of the decision are only getting more visible with time and its deeper ramifications are still unravelling.

On the second anniversary of the demonetisation decision, he also asked the government not to indulge in any further unorthodox, short-term economic measures that could cause more uncertainty in the economy and financial markets.

Singh said November 8 was a day to remember how economic misadventures can roil the nation for a long time while asking the government to restore certainty and visibility in economic policies.

"Today marks the second anniversary of the ill-fated and ill-thought demonetisation... The havoc that it unleashed on the Indian economy and society is now evident to everyone.

"It is often said that time is a great healer. But unfortunately, in the case of demonetisation, the scars and wounds of demonetisation are only getting more visible with time," he said in a statement.

Singh said that beyond the steep drop in headline GDP growth numbers after demonetisation, the deeper ramifications of note ban were still unravelling.

"Small and medium businesses that are the cornerstone of India's economy are yet to recover from the demonetisation shock," he added.

"Notebandi (note ban) impacted every single person, regardless of age, gender, religion, occupation or creed.

"I urge the government to restore certainty and visibility in economic policies. Today is a day to remember how economic misadventures can roil the nation for a long time and understand that economic policymaking should be handled with thought and care."

He said that even after two years, the economy was yet to "recover from the demonetisation shock". That the step had "a direct impact on employment as the economy continues to struggle to create enough new jobs for our youth".

Singh said the financial markets were volatile as the liquidity crisis wrought by demonetisation was taking its eventual toll on infrastructure lenders and non-bank financial services firms.

"We are yet to understand and experience the full impact of the demonetisation exercise. With a depreciating currency and rising global oil prices, macroeconomic headwinds are also starting to blow now.

"It is therefore prudent to not resort to further unorthodox, short-term economic measures that can cause any more uncertainty in the economy and financial markets."

In a sudden move that took everyone by surprise, Modi on this day in 2016 announced a ban on Rs 500 and Rs 1,000 currency notes.