CHENNAI: If not now, demonetisation could not have been done in the near future, said political commentator S Gurumurthy here on Tuesday.
Delivering the 13th Nani Palkhivala Memorial lecture organised by the School of Law, SASTRA University, here he said lacklustre governance in the past under Manmohan Singh had set the tone for the Prime Minister Narendra Modi's monumental decision on November 8. According to Gurumurthy growth of the economy for six years from 2004 was superficial with the creation of a meagere 27 lakh jobs and the current account deficit at 101 billion dollars. The reason, he said was the surge of unmonitored cash in the economy that pushed up gold and property prices while the stockmarket went up by four times, a phenomenon called as asset inflation that eventually led to wealth effect which in turn reflected in the GDP.
"The high GDP had nothing to do with economic activities that would benefit the common man," he said.
In his opinion, the effect that demonetisation has had on counterfeit money and terror funding has largely gone unreported. Making it clear, he said the 26/11 attack was executed at a cost of `25 lakh according to a study.
If this decision had not been made now, the cash in circulation would have gone up from 17 lakh crore to 30 lakh crore in the next five years, leading to a meltdown, he added.
"Though the economists in the country knew the damage that the explosion of cash was wreaking on the economy, nobody had done anything about it," he rued. But, he clamied that the common man had accepted and supported demonetisation for the greater good.
Though Gurumurthy predicted an inevitable slow down in 'real' growth for six months the country has much to look forward like qualitative improvement in the law and order situation by hitting terror funding and counterfeit note, higher economic activity, especially in Naxal-hit areas and coming down of bribery.
The event also had S Vaidhyasubramaniam, Dean - Planning & Development, SASTRA University, in attendance with S Mahalingam, Ex CFO, TCS as moderator.