Dinesh Kamath's Editorial 'Time will judge whether demonetization move was right or wrong' that was published in Newsband

Time will judge whether demonetization move was right or wrong

Centre’s decision to withdraw high-denomination banknotes did impact economic activity in the short term. Demand impulses took a wide-ranging knock from the shortage of cash in the hands of consumers. Discretionary spending on goods and services, excluding food and fuel” was caused owing to restricted access to cash. Food inflation pressures could re-emerge as a consequence of disruptions in agricultural activity as a result of the currency withdrawal.

Less spending is a good thing for a country like India which was spending uncontrollably. Greedy businesses from countries like China is dumping goods to increase consumer at the expense of local small scale industries. It’s time GOI & RBI took advantage of this and give sops to local business to flourish. Definitely a shock is required for real estate corruption to stop which was pushing the inflations to high levels.

The demonetization concept was formulated keeping in mind the Corruption in India, Terrorism & making India a Cashless Economy. This might be a fabricated reason, but, the fact is unknown.

Some economists say that the impulses of inflation in various sectors are merely transitory and that this move would yield fruitful results in the long run. As the decision was already taken, it is not the time to discuss the pros and cons of this move. Instead, we should support the GOI and contribute ourselves for the betterment.

Environmentalists say that Modi's demonetisation technique was meant to make India a more green country and to reverse the negative impact of industrialisation. According to them, there will be very little consumption, very few factories to emit pollutants, and very little carbon contribution....all this and more will make us a very green country.

According to some economists, the GDP will be hit. Already, the daily wage earners in construction industry, beedi workers of West Bengal, diamond cutting and polishing workers in Gujarat and workers in SME sector all over the country, handloom weavers in TN, vegetable /fruit vendors are affected. Certain level of deceleration is expected due to demonetization. With Exports not showing any growth oil prices remaining lower, rupee decelerating against the dollar and not much enthusiasm in the industry for machinery imports, there could not be an apt time for demonetization. Demonetization GST can reduce the quantum of black money and push India to bigger growth. During demonetization, what is interesting to note is excessive spending on marriages, purchase of luxury car foreign junkets etc have drastically come down

There are economists who say that India is the 7th (3rd by PPP) largest economy, but with huge income disparity (per capita rank 140), c 80% informal sector (mostly rural and in agriculture), massive poverty, illiteracy, etc. The self-inflicted financial tsunami is likely to have severe effects, both on the economy and on society, which could last 2-3 years. But then the poor don’t fund elections.