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"It (demonetisation) undermines notes, it undermines bank accounts, it undermines the entire economy of trust. That is the sense in which it is despotic," Sen told NDTV.
He further said his immediate point of view on demonetisation is on its economic aspect.
"It's (demonetisation) a disaster on economy of trust. In the last 20 years, the country has been growing very fast. But it is all based on acceptance of each other's word. By taking despotic action and saying we had promised but won't fulfil our promise, you hit at the root of this," Sen, also a Bharat Ratna awardee, said.
"I am not a great admirer of capitalism. On the other hand, capitalism has many successes... It's despotic in the sense that if a government promises in promissory note that when given, we will give you this amount of compensation for it and to break such a promise is a despotic action," Sen, who is currently Thomas W Lamont University Professor at Harvard University, said.
The demonetisation issue has also rocked Parliament as both Houses have been witnessing disruptions and adjournments due to noisy protests by opposition parties for the past several days.
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