A year after the promulgation of demonetisation, NITI Aayog member Bibek Debroy admitted that the note ban was a temporary shock on the country’s growth, adding that the move was for the institutional cleansing and it should not be judged by a narrow cost-benefit calculus.
Debroy pointed that the negative effects of note ban have gone and the economy is recovering from this dip by showing improvements. Further listing out positive impact of the move, he said that excessive cash has now vanished from the system and came into the banks. He also added that the cash-to-GDP ratio has come down by almost one-third from earlier figure of almost 13 per cent, on account of demonetization.
NITI Aayog member also stressed that it would be unfair, if the move is evaluated with a narrow economic cost-benefit calculus as the aim of the move was not narrow economics. He further pointed that with economic lens, he will evaluate the costs and the benefits of the move in a certain way and with a political-economic kind of lens of cleansing up the system, he will evaluate it in a slightly different way. He added that in terms of economics, one will not have to wait too long as some data, like that of direct tax collections, would come out soon which would reflect demonetisation and help understand its implications.