Recession is likely: Prof Arun Kumar on demonetisation

“The slowdown in demand will last for 1-2 years. Money supply will not be restored for another 7-8 months.”

jasleen

Jasleen Kaur | November 22, 2016 | New Delhi


#recession   #Demonetisation   #scrapped currency   #black money  


 Demonetisation is not the way to tackle black economy and it will in fact affect the white economy, believes Arun Kumar, a former professor of economics at the Jawaharlal Nehru University (JNU) who has authored The Black Economy in India (Penguin, 1999). 

Kumar says that the common people are adversely affected. And as demand falls, production falls and this would ultimately result in fall of employment. “This will affect people at large. And the slowdown in demand will last for 1-2 years. Money supply will not be restored for another 7-8 months. Because of this difficulty in circulation, the demand will slow down for the coming 8-10 months. And therefore recession is very likely.” 
 
He also adds that the move is affecting agriculture, industry and services. Black money would be just 1-2 percent of the total money and and most of this money would also be recycled. “So if you are able to demobilise this income, this would hardly create any difference,” he adds. 
 
Kumar says, “Black income is generated through a variety of means – in spurious drugs, in under or over invoicing in trade and business. There are as many ways of generating black income as there are number of sectors in the economy. So even if you are able to demobilise some amount of black money this year, it would be again generated next year.”
 
Instead of going for demonetisation, Kumar adds, that the government could have tracked the hawala houses, ended banking secrecy and formed the Lokpal to bring in accountability. He also says demonetisation of currency will not tackle the black economy problem and will just hurt the white economy and small traders and workers. 
 
“If this could have solved the black economy problem, then it does not matter even if we have to suffer some pain. If it is not solving the problem and causing a lot of problem to people who are innocent or workers who are not generating black income, then why do it?” 
 

Comments

 

Other News

Gig workforce expected to expand to 2.35 crore by 2029-30

The gig economy has arrived in India, as the Covid-19 pandemic has propelled a flexibility of employment. As many as 77 lakh workers were engaged in the gig economy, constituting 2.6% of the non-agricultural workforce or 1.5% of the total workforce in India. The gig workforce is expected to expand to 2.35

How Antyodaya Saral is simplifying everyday life in Haryana

From obtaining an electricity connection to a driver`s licence, ration card, or old-age allowance, delivery of government schemes and services is an aspect of governance that impacts citizens at various points throughout their lives. The Haryana state government provides over 600 such schemes and services.

A blueprint of India’s economic future: From a former RBI governor

From Dependence to Self-Reliance: Mapping India’s Rise as a Global Superpower By Bimal Jalan Rupa Publications, 184 pages, Rs 695 Bimal Jalan, a former governor of the Reserve Bank of India (RBI), has been one of our finest commentators on econom

Carbon neutrality: distant dream or a possible future?

While many countries have been chasing to reach the carbon neutral status, only a few seem to be living up to their pledges as of now. The famous ’Paris Agreement’ of 2015 was glorified and celebrated that finally 196 countries have united with an intent to mitigate and reduce the greenhouse ga

Agnipath: benefits and challenges on the path ahead

The government this week announced the Tour of Duty or `Agnipath` scheme for the recruitment of soldiers in the armed forces. Under this scheme new soldiers will be recruited only for four years. This radical and far-reaching scheme has attracted mixed reactions from various quarters. While some officials

Connecting credit card with UPI: What it means for you

UPI has become an integral part of our daily lives now. We use it to buy groceries, we use it to send money to friends and family, we use it to purchase tickets, book shows, pay the cab driver, and a whole host of other things due to the ease and availability of such a platform at our fingertips. The best

Visionary Talk: Sanjay Pandey, Mumbai Police Commissioner with Kailashnath Adhikari, MD, Governance Now


Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter