With reference to the report, “Demonetisation monumental blunder, GST hastily implemented: Manmohan Singh” (November 8), the claims and counterclaims on the two phenomena in the headline have become louder now, as Assembly elections are due in Gujarat, the home state of Prime Minister Narendra Modi and Bharatiya Janata Party (BJP) President Amit Shah. As it is a do-or-die situation for the Congress (read its vice-president Rahul Gandhi), the party has fielded before the media the earlier sidelined, reticent economist and former prime minister Manmohan Singh. Demonetisation and the goods and services tax have been the most essential operations to boost the economy. No prime minister, even with an overwhelming majority in Parliament and state Assemblies, dared to implement what Modi has. Considering the amount of work, the large geographical spread, secrecy, an administration rife with corruption and a long gestation period, the BJP government has done a commendable job, something that has been acknowledged by the World Bank, International Monetary Fund and other economists. There are credible indications that these strong measures have started yielding results. The Congress ruled India for over 60 years and Singh should know this that it failed to adopt a constructive approach in opposing the note ban and GST. After repeated electoral losses in state Assemblies and local bodies, the Opposition party has decided to project note ban and GST as the main issues replacing the earlier Godhra riots issue. Just like in the 2002, 2007 and 2012 Gujarat polls, Modi will have the last laugh this time. The man on the street is wiser now. N Ramamurthy, Chennai Beyond the conundrum With reference to the editorial, “The demonetisation puzzle” (November 7), if we consider the note ban exercise in isolation, it appears to be a conundrum extraordinaire. The cost of disruption clearly outweighed the intended objectives in the short term.
However, if seen as a piece in a jigsaw puzzle, the economic events and measures unfolding in the aftermath of demonetisation are not that surprising.It is a no-brainer that the menace of black money cannot be wished away by simply banning old high-denomination notes. Instead, a multi-pronged approach covering the structural issues has to be adopted. The government has decided to address the bigger issue of corruption and black money in a comprehensive way, covering both short-term and long-term measures. Continued stress on digital payment, deregistering of shell companies and a sharp focus on benami properties point to such an approach. Implementation of the goods and services tax, with a resolve not seen in the past, indicates the government’s intention to make the overarching taxation architecture transparent and technology-enabled. No doubt, it is still a work in progress and the teething troubles of varying intensity will get smoothed out over time. With a high proportion of people coming into the tax (both indirect and direct) network, the government will have more leeway to make the tax structure less burdensome and thereby obviate the propensity to evade taxes. Economic decision-making, especially of the nature and proportion of India’s demonetisation gamble a year ago, is fraught with unknowns and hence could entail serious consequences. Yet, a year is not enough to judge the efficacy and impact of such a measure on the economy and on the behavioural dynamics of people. When demonetisation is seen as part of several reforms, it becomes easier to appreciate its limited role, at least in the short term.
Santanu Sarma Barua, Mumbai Letters can be mailed, faxed or e-mailed to: The Editor, Business Standard Nehru House, 4 Bahadur Shah Zafar Marg New Delhi 110 002 Fax: (011) 23720201 · E-mail: firstname.lastname@example.org All letters must have a postal address and telephone number