Note ban: Costs and benefits

http://www.thehindu.com/business/note-ban-costs-to-outweigh-long-term-benefits-rajan/article19621178.ece
  
Rajan’s regrets

This refers to the report “Note ban costs to outweigh long-term benefits: Rajan” (The Hindu, September 5). Dr Raghuram Rajan, with his long teaching experience and deep knowledge of the ins and outs of Indian financial sector, has been using his excellent communication skills ever since he started taking interest in India’s economic development. Viewed in this context, his new book “I Do What I Do” which comes out after the one year’s self-imposed ‘silence’ (Rajan claims this silence was not to embarrass his successor when he settles down as RBI governor!) will be more popular among economists, analysts and policy makers than the memoirs his two immediate predecessors brought out in quick succession in recent years.
“I Do What I Do” interprets events during the three year tenure of the author’s stay at Mint Road by just adding notes or explanations to what Dr Rajan has already spoken or written as RBI governor.
The cautious observation about short-term economic costs outweighing long-term benefits of demonetization now being made public is a masterstroke. As the opinion was given ‘orally’, it is always possible to play with the words like long term benefits and short term losses. The present revelation makes it abundantly clear that RBI was associating with the groundwork for demonetization from February 2016.  The present revelations can also expose Dr Rajan to the allegation of having evaded the responsibility of not getting himself involved in preparing RBI adequately to implement the ‘Note ban’, once a decision was taken by GOI.
Two other failures he will have to defend in future could be, being a mere spectator when the central bank’s capital and reserves eroded to an all time low during his tenure and his having shown pedestrian apathy to the cause of parity with central government staff in retirement benefits for RBI retirees, while on record he was convinced about the genuineness of the long-pending demand from the staff.
M G Warrier,Mumbai


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