Two years after demonetisation: Economic misadventures can roil nation for a long time, writes Manmohan Singh

Former prime minister and senior Congress leader Manmohan Singh on Thursday vehemently criticised the government of Prime Minister Narendra Modi on the second anniversary of demonetisation.

In a press statement, Singh called the step of demonetisation an ill-fated and ill-thought exercise that the Modi government undertook in 2016. Reacting to the drive, the Congress leader also said the scars and wounds of demonetisation have become more visible with the passage of time. He reiterated that economic misadventures can roil the nation for a long time and so economic policymaking should be handled with thought and care. 

"Today is a day to remember how economic misadventures can roil the nation for a long time and understand that economic policymaking should be handled with thought and care," Singh said.

"Today marks the second anniversary of the ill-fated and ill-thought demonetisation exercise that the Narendra Modi government undertook in 2016. The havoc that it unleashed on the Indian economy and society is now evident to everyone. Notebandi impacted every single person, regardless of age, gender, religion, occupation or creed," he said.

"It is often said that time is a great healer. But unfortunately, in the case of demonetisation, the scars and wounds of demonetisation are only getting more visible with time," he added.

Speaking on the impact of demonetisation, the former prime minister said that it had its ramifications on the GDP growth numbers, small and medium businesses, employment and the financial markets among others.

"Beyond the steep drop in headline GDP growth numbers after demonetisation, the deeper ramifications of notebandi are still unravelling. Small and medium businesses that are the cornerstone of India’s economy are yet to recover from the demonetisation shock. This has had a direct impact on employment as the economy continues to struggle to create enough new jobs for our youth," Singh said.

"The financial markets are volatile as the liquidity crisis wrought by demonetisation is taking its eventual toll on infrastructure lenders and non-bank financial services firms. We are yet to understand and experience the full impact of the demonetisation exercise. With a depreciating currency and rising global oil prices, macroeconomic headwinds are also starting to blow now," he also added.

The senior political leader ended his statement with a message asking the Centre to not resort to further unorthodox, short-term economic measures
that can cause uncertainty in the economy and financial markets. He urged the government to restore certainty and visibility in economic policies. 

"It is therefore prudent to not resort to further unorthodox, short-term economic measures that can cause any more uncertainty in the economy and financial markets. I urge the government to restore certainty and visibility in economic policies," he said.

On November 8, 2016, at 8 pm, the Centre had announced a ban on the currency notes of Rs 500 and Rs 1,000 notes and declared them as non-legal. 

The sudden move that took everyone by surprise, restricting the availability of money for the next two days and taking months to return to normal. The Centre had also introduced new Rs 500 and Rs 2,000 notes. Since then, various opposition leaders have highly criticised the Centre's move, while the members of the Bharatiya Janata Party (BJP) and its allies have backed the decision.