Bold Move.

Very bold but not a perfect move to prevent generation of black money and corruption 

Apropos your editorial more disruption than Economic Benefit (ET dated 9/11/2106), the arguments put forward therein saying that there are better ways to fight black money do not make sense and only add to the woes of the economy in the long run. The measure of demonetisation to fight black money and all its ill effects like corruption, inflation, growth of informal economy etc needs an element of surprise and what Mr Modi has done is very bold, timely, commendable and most appropriate to put the economy on the right track to derive the full benefits of growth and achieve a welfare state in all its sense. Though the Modi Government has given lots of hinds on its intentions to erase black money and corruption and several measures including the recently concluded declaration of black money have been introduced in that direction but the results have unfortunately not been encouraging and the performance of the economy in general and the ease of doing business in India continue to be lagging behind.

The withdrawal of Rs 1000 and Rs 500 denomination notes is the best available solution to eliminate the ills of the economy in the present circumstances although such a measure may have some disruptions and inconveniences which are inevitable in the larger interests of the economy and long term gains of sustainable nature. However, Reserve Bank and the Government seem to have well coordinated to make the withdrawal of these notes very smooth and measures have been in place to minimise the disruptions. All said, the introduction of Rs 2000 denomination notes and Rs 500 new notes cannot be said to be a perfect move in the over all schemes to prevent generation of black money. It may have definitely a nullifying and negative impact.

Dr T V Gopalakrishnan

( Letter sent to ET on 9/11/2016 but not published).