Ex-economic advisor’s note ban criticism fuels fresh Rahul attack on Modi
Rahul Gandhi’s offensive came after reports that the former chief economic advisor Arvind Subramanian, who had once defended the notes ban, termed the decision a “massive, draconian monetary shock”.Updated: Nov 29, 2018 21:24 IST
Congress president Rahul Gandhi renewed his attack on the government over Prime Minister Narendra Modi’s sudden decision to ban high-value currency notes that he described as a “huge scam”. Rahul Gandhi’s offensive came after reports that the former chief economic advisor Arvind Subramanian, who had once defended the notes ban, termed the decision a “massive, draconian monetary shock”.
In a tweet attack firmly aimed at Prime Minister Narendra Modi, Rahul Gandhi launched a double-barrel attack on the government for demonetisation and the Rafale fighter jet deal. Both, he said, were a “crime against India & a huge scam”.
But he didn’t spare Arvind Subramanian, wondering why he didn’t just quit as advisor if he felt so strongly about it.
“...I wonder why he didn’t resign when he disagreed so much? Don’t worry India, the guilty will be investigated and punished,” Rahul Gandhi said in the tweet.
The Congress leader, a sharp critic of the government, has variously described PM Modi’s November 8, 2016 demonetisation move as a scam that was designed to launder black money into white. The government, however, insists the notes ban decision had help block the avenues to generate black money, discourage cash transactions and expand the tax base.
Subramanian succeeded Raghuram Rajan as the finance minister’s chief economic advisor in 2014 and announced his decision to exit the government in June this year.
It is in his upcoming book “Of Counsel: The Challenges of the Modi-Jaitley Economy” that he has devoted a chapter to demonetisation.
In this, according to news agency IANS, Subramanian describes the demonetisation decision as “a massive, draconian, monetary shock that accelerated economic slide to 6.8 per cent in the seven quarters after it against the 8 per cent recorded prior to the note ban”.
He says that he does not have a strongly-backed empirical view apart from the fact that the welfare costs, especially on the informal sector, were substantial. He hasn’t, however, indicated if his views were sought by, or given to the government.
The former CEA, according to IANS, says he does not think anyone disputes that demonetisation slowed growth. Rather, the debate has been about the size of the effect -- whether it was 2 per cent points, or much less. “After all, many other factors affected growth in this period, especially higher real interest rates, GST implementation and oil prices.”
From the political aspect, he says that demonetisation was an unprecedented move that no country in recent history had made in normal times. The typical pattern had been either gradual demonetisation in normal times or sudden demonetisation in extreme circumstances of war, hyperinflation, currency crises or political turmoil (Venezuela in 2016).