The impact of demonetisation "on the weaker sections of our society and business is far more damaging than any economic indicator can reveal," said former Prime Minister of India Manmohan Singh in an interview to a news agency on the first anniversary of the Narendra Modi government's move to declare all five-hundred and thousand rupee currency notes invalid.
Singh termed demonetisation "an attack on the independence and credibility of the RBI as an institution" and expressed fears regarding a "creeping culture of erosion of institutions in other spheres" as well. He called on his successor and current Prime Minister Narendra Modi to work towards consensual policy solutions to rebuild the Indian economy.
The former PM expressed concerns regarding the loss of jobs in the small and medium enterprises sector and also emphasised the exacerbating impact that may have on inequality. He, however, described effort to reduce cash-based transactions nudging the economy towards digital payments as "laudable pursuits".
However, he also said, "We also need to get our economic priorities right. It is unclear that these goals of cashless economy will indeed help small enterprises become larger and achieve scale efficiencies. That should be our priority". Commenting on whether efforts to bring the country's vast informal economy, by some estimates at 40 percent of gross domestic product, into the tax net via demonetisation and the Goods and Services Tax, Singh said "the means is as important as the ends" and the ends cannot be achieved "through coercion or threats or raids which can be counter-productive".
