Leaks Forced PM Modi’s Hand on Note Ban, Hints Arvind Panagariya

The economist assured that though people are facing some hardships now, the GDP rates would eventually go up.

NITI Aayog Vice-Chairman Arvind Panagariya. (Photo: PTI)

Prime Minister Narendra Modi may have had to announce the decision of demonetisation before he intended to, Niti Aayog Vice-Chairman Dr Arvind Panagariya told a TV channel on Thursday.

While talking to India Today’s Rahul Kanwal, Panagariya mentioned that there were reports of demonetisation before the actual announcement. This might have led to the announcement of demonetisation before proper planning had been done.

[...] The news had begun to leak out, there were reports in <i>Dainik Jagran</i> on 6 November, the pictures of the Rs 2,000 note came out while they were being transferred from the RBI to different branches. It is probable that this led the Prime Minister to take the action (on demonetisation) before he had planned.

Arvind Panagariya

He admitted that there have been some hardships in the short-term but assured that the situation would be back to normal soon. He said that though the GDP rate would go down in the third and fourth quarter, the numbers would certainly go up next year.

Without naming anyone, the veteran economist seemed to skeptical about the statements made on the GDP rates going down and said that it wasn’t possible to assess the situation this early.

When asked about the government’s next move after demonetisation, Panagariya said that the RBI needed to monitor the cash-to-GDP ratio.

Current tax laws give a lot of discretionary powers to the tax man. The government is looking at reducing exemptions and simplifying tax laws so that there is no scope of discretionary powers being misused.

Arvind Panagariya

(Source: India Today)