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Demonetisation was not well thought-out, useful exercise: Raghuram Rajan
New York, April 12 (IANS) Demonetisation was not a well-planned or well thought-out useful exercise said Raghuram Rajan, ex-Governor of Reserve Bank of India, adding that the government was cautioned about it when the idea was mooted.
“Demonetisation I think was not a well-planned, well thought-out useful exercise. And I told the government that when the idea was first mooted. It seemed to me that people would find their way around,” Rajan said at the Harvard Kennedy School in Cambridge on Wednesday.
The Indian government, in November 2016 demonetised high value Rs 500 and Rs 1,000 notes with the aimed to curb black money in the system.
“At the time of demonetisation, it was 87.5 per cent of the currency value. Any macro economist would say that when you are demonetising 87.5 per cent of the currency, better make sure that you print 87.5 per cent or pretty-much close to that. India went into it without having done that,” Rajan said.
“So it had a negative economic impact. But also the idea was that somehow people who had money stored in the basements, without having paid taxes on it, would sort of overnight see religion, come to the government and say sorry we were hiding these stuff, let me pay taxes on it. That was to some extent naïve of you. Anybody who knows India, knows that very quickly we find ways around the system,” he added.
Rajan said essentially the money that was demonetised came back to the system, “but it did not have the direct effect that was sought that a lot of people will pay taxes.”
“There may be some longer term impact that people think that if this sort of thing happens that the government is serious of collecting taxes, there may be greater tax payments, but we still have to see strong evidence that is true,” the ex-governor said.
“So the negative economic impact that people not having currency, not being able able to pay, economic activity plummeting, especially in the informal sector, that happened. A lot of people probably lost their jobs, we do not count that well because it is the informal sector.”
He, however, said: “The positive impacts are out there in the future, we do not know whether they will be important and to my mind, it was not a policy that was useful at that time.”
Asked whether the RBI was consulted before the government announced demonetisation, Rajan said: “We were consulted and we did not think it was a good idea on demonetisation. The cost of demonetisation vary between 1.5-2 per cent of GDP.
“I do not think there is huge amount of dispute about it. I don’t think even the government necessarily challenges that and it would be a really die hard government advocate who would say that growth benefits of demonetisation were immediate.”
Talking about the non-performing assets and multi-crore Punjab National Bank scandal, Rajan said the worry is some of the banks still follow antiquated system.
“Worry is systems are not adequate to prevent rogue dealers, rogue employees colluding and making off with stuff.”
Regarding the newly introduced indirect tax regime of Goods and Services Tax (GST), he said: “GST implementation, we will figure it out eventually. It would be nice if we can implement it much better than we do. But it is not an unfixable problem, we can work on it. I won’t give up hope on that at this point of time.”
–IANS
ag/hs
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Dr. Abhishek Verma Dedicates a Shelter in Memory of His Mother, Veena Verma, at KGMU; Inaugurated by Daughter Nicolle Verma
World-renowned business tycoon Dr. Abhishek Verma has supported Foodman Vishal Singh’s Hunger-Free World mission. In memory of his mother, Late Veena Verma, who was a 3 term Rajya Sabha MP.
Dr. Verma dedicated a state-of-the-art free permanent shelter for the attendants of patients at KGMU Medical University, Lucknow, under the aegis of Vijay Shree Foundation. His daughter, Nicolle Verma, inaugurated the shelter.
During the event, Foodman Vishal Singh honored Nicolle Verma by presenting her with a memento. Mrs. Nidhi Sharma and Avantika Yadav, associated with the organization, welcomed her with garlands. Following this, Nicolle Verma distributed essential items to the attendants and also handed out fruits. She became emotional remembering her grandmother on her birth anniversary.
On this occasion, she also inaugurated the “Veena Verma Sevalaya” in memory of her grandmother, Veena Verma, to serve the attendants. She expressed, “I feel proud that my family is engaged in nation-building as well as social service. Today, in collaboration with Vijay Shree Foundation founder Foodman Vishal Singh Ji, I feel immensely proud to dedicate this shelter for the poor, helpless, and needy attendants of patients battling serious illnesses like cancer. I am honored to be associated with the Hunger-Free World Mission for humanity.”
Inspired by the continuous humanitarian service provided by Vijay Shree Foundation over the past 17 years, Nicolle Verma donated 10 lakh rupees to support the cause. The purpose of this donation is to ensure that services continue for the needy attendants of patients suffering from severe illnesses in hospitals, as facilitated by Foodman Vishal Singh.
It is noteworthy that Dr. Abhishek Verma’s family has a legacy of public and philanthropic service. They are helping millions to carry forward the values and service work of their parents. On the occasion of his mother’s birth anniversary, Dr. Abhishek Verma dedicated this state-of-the-art permanent shelter at Lucknow Medical College to serve the attendants of patients through the Vijay Shree Foundation.
Supporting Foodman Vishal Singh’s Hunger-Free World mission, Dr. Abhishek Verma assured that he would continually support keeping this flame of humanity alive. He also promised to assist in providing medicines to the helpless patients.
Continuing her grandmother’s legacy of service, Nicolle Verma personally served food to the needy patients and attendants. She said, “It is our good fortune to have received the joy of doing this noble work today through Foodman Vishal Singh. I have taken another step forward in carrying my family’s values and cooperation by joining hands with the Vijay Shree Foundation. My father taught me to serve and help the needy, and I feel happy when I bring a smile to someone’s face.”
On the birth anniversary of the late Veena Verma, the event organizer, Vijay Shree Foundation founder Foodman Vishal Singh, said, “We feel proud and happy that Dr. Abhishek Verma, a globally renowned business tycoon, has extended his support to uplift our country from the hunger index. Today, on his mother’s birth anniversary, he inaugurated a state-of-the-art permanent shelter at Lucknow Medical College, which will always be helpful for the needy attendants of patients. It is a pleasure for me and the organization to receive the affection of Mr. Verma.”
The event was attended by General Manager Verma Family Office Hemant Garg, Sonu Rajput, and the organization’s volunteers, including Sandeep Singh, Parmeshwar Ji, Prashant Rao Gautam, Balram Singh, Ramesh Chaudhary, Suman, Jeetu, Anil, Suraj, Vinay, Manish Bhadauria, Manas Mehrotra, Vivek, Apurv, Happy, and others.
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