Demonetisation has affected all sections of the society
“However, it is a corrective step. I consider demonetisation as an investment,” said economist and journalist S Gurumurthy at a talk on ‘Demonetisation: Its role, impact and follow-up’, organised by the Chennai International Centre here on Friday.
One of the key successes of demonetisation is that nearly 30 crore bank accounts were opened, and brought huge savings into the banking system.
One of the fallouts of demonetisation is it brought unmonitored money into the system, he added.
Irresponsible monetary management has been stopped, tax base has risen by about 20 per cent and advance tax for 2017-18 has increased by nearly 42 per cent.
These are the ways by which the black money has come in to the system, he said.
Today, it is not possible to bring black money to invest in land, gold or equity on the scale that used to happen in the past.
However, the government failed to implement Mudra Bank, and this should have come before demonetisation, he pointed out. That was the original plan. But Mudra Bank was stopped by the RBI, which did not want to give up control over financing smaller players, he added. Hence, aggregate consumption and job generation have stagnated and the informal sector borrows at over 300 per cent interest rate, he further said.
RBI and the Department of Financial Services are insensitive, and this will hit the growth badly, he said.
Demonetisation and the Income Disclosure Scheme should have been done together. Despite this slip, with the technological advancement and digital payments, it is easy to track payments, he said.
GST was not a bad decision but an ambitious decision one, Gurumurthy said.