Accept noteban blunder, rebuild economy: Manmohan to Modi

Accept noteban blunder, rebuild economy: Manmohan to Modi

Time for politicking on demonetisation is over and it is time Prime Minister Narendra Modi acknowledges the blunder and seeks support from all to rebuild the economy, former prime minister Manmohan Singh has said.

In an interview to BloombergQuint, Singh described demonetisation as a "catastrophic economic policy" that may exacerbate inequalities which can be harder to rectify in the future.

"In such a diverse country such as ours, inequality can prove to be a far greater social malaise than in other homogeneous nations," he said.

Singh termed the objectives of less cash or digital economy as "laudable pursuits", but added that it was "unclear" whether it would indeed help small enterprises become larger and achieve scale efficiencies.

"It is time the prime minister graciously acknowledges the blunder and seeks support from all to rebuild our economy," Singh said.

"There comes certain moments in a democracy's history when economics should take precedence over politics. It is one such moment now in India," the former prime minister said.

On the government's efforts to formalise the informal economy through initiatives such as the GST, Singh said that any move to widen the tax base should be welcomed but warned that in its current form, GST threatens to derail the informal sector entirely.

Singh, a former RBI governor, said demonetisation was also an attack on the independence and credibility of RBI as an institution.

The former prime minister termed jobless and unequal economic growth as biggest twin challenges before the nation.

"There are also no easy solutions to these challenges. At the very least, we must ensure we do not exacerbate these challenges through self-inflicted wounds such as demonetisation," Singh said.

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