Former Reserve Bank Governor Bimal Jalan has an unambiguous take on the radical demonetisation exercise: it could have been done with sufficient notice to the public, and implemented in a way without hurting the majority of small businesses and citizens who aren't black money hoarders.
In an interview with the Indian Express, Jalan, who served as India's central banker during the Asian Financial Crisis in the late 90s, pointed out that while the demonetisation exercise sends a message against black money, it does little to stop the "flow" of black money.
"There can be no two opinions that a message should be given and the other part of it is to implement it in a way that the general population should not be adversely impacted by the action we take, that too without notice," he told IE.
On the need for secrecy and timing, he didn't see any convincing rationale why that was the case, especially as the shock move has hurt many small business and people who don't have black money.
"There is no reason to my mind to be secretive, unless there is an emergency. I want to do it in three weeks, or two weeks or one week," he said, adding that this is not the same as a "surgical strike."
According to him, the timing is also a mystery as the majority of people don't have black money.
"90 to 95 per cent of the people don't hold black money. This is where we need to strike a balance, doing something with a notice and doing it in a way where the majority of the people are not hurt," he said.
He also pointed to the serious lapses in the government failing to take into account how much replacement currency it could print before taking this action.
"What prevents my government from taking cognisance of what is well known i.e., how much currency can it print," he said. "What is the advantage if I cannot print it within a limited period of making a very large proportion or multiple of that as illegal tender. How does that the ordinary person handle it?"
He strongly advocated that government action should be such that it doesn't affect small and medium businesses.
"This SME class has been worst affected because it deals in cash. Grocery shops on the road, etc. The core point is if the impact of that on the people is negative then you have to try and find the means to see what can be done."Suggest a correction