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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