Demonetisation a shock therapy to change business-as-usual scenario

Sanjeev Sanyal, Economist, Urban Theorist & Author, while addressing the session on 'Business and Economics' at FICCI's 89th AGM, said that neither theory nor empirics could explain the recent demonetization move by the Indian Government.

However, he felt that the move was a kind of a shock therapy in order to change the business-as-usual economic and financial scenario prevailing in the country. He cited a similar instance of how the Singapore Government initiated its drive towards cleanliness in the 1960-70s.

On money laundering, Sanyal suggested that the system was supposed to react the way it did and going forward will find new ways of transacting. He said that an example needs to be created to set the system in new order.

Asked about his opinion on the global scenario, he highlighted that previous assumptions of trade and finance were crumbling and that the rules of the game are now changing radically. He believed that the tipping point has been crossed and business and society will need to adapt to this new economic order.

Speaking about the drivers required for enhancing organized capital in India, he said that India is at present in its second phase of demographic transition and added that the traditional East Asian Economic Cycle has not worked for India and that we can only break out from this by improving the banking system and moving towards digitization.

He said that more money needs to be spent on research in climate change than on conferences and added that greater focus should be laid on climate change adaptation in addition to the climate mitigation measures.

He stressed on the need for India to move forward with water conservation and energy efficiency irrespective of the measures other countries are undertaking.

On climate change, Naina Lal Kidwai, Past President, FICCI, said that the measures undertaken by the Government to address the two key issues of Water and Energy efficiency have been encouraging.

Kidwai said that focus needs to be laid on issues that will have a bearing on the economy and the way India needs to move forward and added that India has not remained unaffected amidst the global headwinds and put forth four points which need to be further deliberated upon like the trends defining India's future growth, its demographics, carbon footprint, water conservation and energy efficiency and technology and digitization.