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Demonetisation may lead to sharp rise in prices of goods: Pronab Sen

Former Planning Commission member and India’s top statistician Pronab Sen on Thursday warned a parliamentary panel that demonetisation may lead to sharp rise in prices of goods.

india Updated: Dec 23, 2016 09:07 IST

Saubhadra Chatterji, Hindustan Times, New Delhi
A bank employee checks stacks of new 2000 rupee notes in Ahmedabad.
A bank employee checks stacks of new 2000 rupee notes in Ahmedabad.(AFP Photo)
         

Former Planning Commission member and India’s top statistician Pronab Sen on Thursday warned a parliamentary panel that demonetisation may lead to sharp rise in prices of goods.

Deposing before the panel on finance, of which former Prime Minister Manmohan Singh is also a member, Sen rejected demonetisation as a good move to tackle corruption and black money.

“After high-value notes were scrapped, the demand for goods and services compressed. And it has led to compression in supply of goods as well as there are fewer customers. As the money is pumped in, the demand will rise sharply and with less supply and more demand, prices are bound to rise,” he said.

He also told the panel that one-time demonetisation can’t check fake notes. “Fake currency is something to be alarmed about. From time to time, steps have to be taken to check fake currency,”Sen said.

RBI governor Urjit Patel was earlier scheduled to appear before the panel but the lawmakers decided to call him later. Sources said Patel will appear before the panel on January 18.

It will be the first time when the RBI government will appear before a parliamentary panel to brief on demonetisation.

First Published: Dec 23, 2016 01:06 IST

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