Economic Survey: Don't penalise cash withdrawals, says Arvind Subramanian

Survey calls note ban a reverse helicopter drop, whose impact will be clear over a one-year horizon

Opening with spiritual leader Ramakrishna Paramahamsa’s “Taka maati, maati taka,” Bengali for money is mud, the Economic Survey 2016-17’s demonetisation chapter skipped difficult questions on note-ban implementation, while trying to figure out how best to wring “reverse helicopter drop” in the long term. 

Advising against any impulse to penalise cash withdrawals in the short term, chief economic advisor Arvind Subramanian in the Survey said, “The early elimination of withdrawal limits will help build confidence. By the same token, there should be no penalties on cash withdrawals, which would only encourage cash hoarding.”

Supply of currency should follow actual demand and