With the completion of demonetisation process, Chief Economic Advisor (CEA) Arvind Subramanian has said that note ban can be called successful only if the amount of currency in circulation comes down over time and there is an increase in tax compliance. He said that before demonetisation, the cash to GDP ratio was something like 12 percent, and added that if not ban is to be considered successful then this ratio should come down. Underlining that there are cost and benefits of the note ban move, he said that the cash circulation in the economy is easily measurable. Though, the Reserve Bank of India has remonetised only below 70 percent of the cancelled money, it has lifted all the curbs on withdrawals from March 13, 2017.
CEA also said that the note ban move to be called a success, the number of taxpayers needs to go up. He also warned that the general culture of non-compliance and illicit money creation should also improve through demonetisation, which was trying to signal a regime shift that in future this behaviour will be less tolerated.
The CEA further said that while the progress of digitisation can and will be monitored to show the success of the move, sufficient attention should also be given to see how the 35 million people who neither own a smartphone nor a feature phone are taking to the digital process. But he also added that the country is a cash-based economy and digitisation should not be imposed on people.
