NEW DELHI: On the eve of the third anniversary of Demonetisation, former finance secretary Subhash Chandra Garg in a note said that the Rs 2000 notes which the Narendra Modi government brought replacing older Rs 500 and Rs 1000 notes were being hoarded and should be snuffed out by getting people to deposit them in bank accounts.
The startling claim made by the officer who was close to Modi at one time but was unceremoniously removed from office after having advocated Sovereign bonds, is remarkable as one of the goals of demonetisation was to check hoarding of currency.
Some three years ago, the government had shocked the nation with the demonetisation of currency worth about Rs 15.42 lakh crore, roughly 86 per cent of all notes in circulation at the time.
The former secretary, who was an executive director with the World Bank at that time, wrote that “a good chunk of Rs. 2000 bank-notes” which accounts for approximately a third of India’s currency notes by value, “are actually not in circulation, having been hoarded.” Garg advocated that these should be “demonetized, without causing any disruption”, by “depositing these notes in the bank accounts.”
Garg an IAS officer from the Rajasthan cadre also defended his advocacy of sovereign bonds, an idea which the Government seems to have unked. He said “a confidant India needs to raise Sovereign Bonds in Foreign Currency”, explaining that advanced economies are awash with savings, but with little scope for deployment of money.
Garg who was out of North Bloc by the time the Government started announcing a series of measures to arrest the slowdown in the economy, also warned against “quick fixes”.
“When growth slows down, there is a widespread concern and angst aimed mostly at the Government with the expectation that the Government would bail out the economy from the situation…This leads the Government to look for quick fixes for ‘jumpstarting’ growth. These quick fixes, more often than not, do not work,” he said. The Government has in the past slashed corporate taxes, launched loan melas and announced sector-wise packages to help industry revive.
However, many leading economists have criticised these as measures which either do not address the main problem of a fall in demand or of being too late, too little.