Demonetisation was not required at all: Manmohan Singh

Former Prime Minister Manmohan Singh today said the economy is on a “downhill path” because of the “adventure” of demonetisation undertaken last year which was not required at all, either technically or economically.

Singh, a renowned economist considered to be the architect of the reforms of early 1990s, said demonetisation has not been successful in any civilised country, except some of the Latin American nation. “I don’t think demonetization was at all required… I don’t think it was technically, economically necessary to launch this adventure,” he said at the Indian School of Business (ISB) Leadership Summit here when asked if the note ban decision was the right one.

Prime Minister Narendra Modi had announced on November 8 last year scrapping of Rs 500 and Rs 1000 currency notes. He said the process involved withdrawing almost 86 per cent of the currency from circulation and “there was bound to be fallout which we are all seeing.” Singh made a speech before answering a few questions at the event.

“The economy has slowed down as I had projected a few months ago as a result of demonetization and also the fact that demonetisation has been accompanied by the GST, which is a good thing that we have done in the long term. But in the short term, there are glitches that need to be resolved. Therefore, the economy has experienced a downhill path,” he said.

He said the GDP growth was much higher in the last quarter of 2016-17 than the first quarter of this financial year. There are certain things that need to be done immediately, Singh said. “When we were in office, investment rate in the economy was 35-37 per cent but now it is less than 30 per cent. Private investment in particular is not growing,” he said.