RSS ideologue Gurumurthy calls note ban 'financial Pokharan', blames Manmohan
When it comes to defending Prime Minister Narendra Modi's demonetisation drive in the public domain, right-leaning intellectuals seem to have a clear line - deflating the costs and inflating the benefits.
This was evident on Monday evening when RSS ideologue Swaminathan Gurumurthy, a renowned chartered accountant and journalist, spoke at the pro-RSS Vivekananda International Foundation, New Delhi.
Eminent analysts such as Bibek Debroy, Arun Kumar and Sanjay Baru were among the other attendees.
Gurumurthy agreed that black money could not be controlled by a single macro initiative. However, he defended the government on most counts.
"You need to change the economic psychology of the country (such as irresponsible spending) and follow up with other policies, otherwise black money can again be generated in another 10 years", he said.
Gurumurthy called demonetisation as a 'financial Pokhran', because of the secrecy involved and a paradigm shift in the Indian economy. He also admitted that errors in the implementation was inevitable due to the secrecy that had to be maintained.
Manmohan in the line of fire
Gurumurthy was most acerbic in his criticism of Manmohan Singh, P Chidambaram and Raghuram Rajan.
Gurumurthy raised a question for former Prime Minister Dr Singh - he wanted to know the basis of his estimates that growth will be hit by 2%.
He added that demonetisation is the unavoidable consequence of the 'monumental mismanagement' of Singh's regime, taking a dig at the former PM's remark in the Rajya Sabha that the implementation of demonetisation was 'monumental mismanagement'.
"Manmohan Singh and P Chidambaram should ask themselves how growth reached a peak during UPA, despite only a 3% rise in money supply. It was jobless growth, not driven by consumption or production, but due to huge increase in asset inflation, such as gold, real estate and land prices and the capital gains made out of it. That asset inflation was caused by huge amount of cash circulating in the market. How did that much of cash circulate in the market, though there was rising credit card, debit card and digital transactions?" asked Gurumurthy.
He cited data comparing how the NDA rule during 1999-2004 created 60 million jobs, whereas from 2004-2010, under the UPA, only 2.7 million jobs were created.
Indirect attack on Rajan
Gurumurthy turned up the heat on former RBI Governor Raghuram Rajan when he was asked about the devastating effect that demonetisation has caused to the informal economy.
"The government wants to convert the informal economy to a formal economy. Demonetisation will organise the unorganised market," he said. But did not elaborate clearly on how demonetisation will help in achieving that end.
However, he said high interest rates were a bigger bane for the informal sector, and due to demonetisation, interest rates may drop.
"The informal sector is plagued with high interest rates and Mudra Bank was created to serve the informal economy with small loans. However, the RBI failed in the implementation", he said.
It was clear who Gurumurthy was blaming for it. "Rajan understood the US economy better, but not the Indian economy," he said.
During the programme, Gurumurthy categorically stated demonetisation was planned two months after the change of guard at the RBI.
People agree with objectives
The economic analyst also sought to underplay the pain that the common man was going through.
"I visited a few places in Uttar Pradesh and people were happy. At least 25 crore Indians have stood in the bank line for the past one month, without the country going up in flames. This demands a sociological study of its own, and suggests that they agree with the objectives," he said.
According to Gurmurthy, the number of people over the age of 80 dying in bank lines was a 'misguided narrative'. The number of deaths that could be ascribed to demonetisation was a maximum of 29, which was miniscule compared to the people who have stood in line, according to his estimates.
Gurmurthy, whom the government consults on economic matters, also indicated that the new Rs 2000 currency note was a short-term measure to bridge the gap, and may soon be phased out.