Chennai: The demonetisation of Rs 500, which is a lower denomination, is a good move that could help flush out unaccounted money stashed as currency notes, said noted economist and RBI former governor C. Rangarajan on Friday. When asked about the move not having been successful in wiping out the accumulation of black money despite having been implemented in 1978, he told Deccan Chronicle: “Today, Rs 500 is a note that is of a lower value than what a Rs 100 notes were in 1978, so it will cause a major disruption. This disruption will help flush out some amount of the unaccounted money.”
He added that demonetisation as a move though will not deter future accumulation of unaccounted money, but will ensure flushing out of the black money that has been kept stashed in the form of cash. “It will surely cause initial disruptions, but it is a move to direct that as a country we go cashless,” he said. “The inconvenience caused can be reduced if the currency notes are replenished quickly. Obviously, those with more currency notes than their income will find it difficult to come out to the banks,” he added.
The former governor of the state had addressed a gathering at 'India Finance Forum' organised by Confederation of Indian Industry (CII) earlier on Friday. Speaking about the reform measures, he added that there is no evidence as of now to show that newer investments are being taken up. “Increased production can happen, from newer investments and better utilisation of past projects. Exports have declined because of a decline in growth rate across the economy, and the world exports had declined, too,” he said.
He added that reformative measures are being taken, but it will take some time to see the impact of such reforms. “The reforms are in the right direction — GST council has taken the right step,” he added. He said the socioeconomic problems can be put an end to only through growth and our aim by 2020 should be to achieve a per capita income of $8000-9000 against the current $1800.
