HYDERABAD: Reserve Bank of India former governor Duvvuri Subbarao has hailed the demonetisation measure introduced by PM Modi as creative destruction and the most disruptive policy innovation.
“On November 8, the PM and the RBI demonetised 86 percent of the currency in circulation overnight in the most disruptive policy innovation in India since the 1991 reforms,” he told in a conference held at the Institute of Development and Research in Banking in Technology (IDRBT) here on Thursday.
“Demonetisation is a creative destruction. But it is a very special type of creative destruction. Because what it has destroyed is a destructive creation, i.e. black money. So we can understand that demonetisation is creative destruction of a destructive creation,” he said.
Appreciating demonetisation as a policy which helped in destruction of black money, Subbarao pointed out that demonetisation would bring about landmark changes in the Indian financial scene and create new opportunities to fintech companies.
“There are two perspectives. Extension of a global trend of financial technology which is upending the finance industry and discontinuous change in a low-income country from cash incentive economy to a less-cash economy,” he elaborated. Stressing that the move would lead to innovations in the country’s financial sector, Subbarao suggested that traditional banks should work with startups to leverage the benefits of note ban.