Demonetisation: Good politics, but bad economics, says Yogendra Yadav

GURGAON: Yogendra Yadav of Swaraj India, a party he floated along with senior advocate Prashant Bushant after parting ways with Arvind Kejriwal’s AAP, says the Narendra Modi government’s demonetization policy may be well-meaning but Prime Minister Modi has got his economics horribly wrong. Excerpts from an interview to TOI:

What will be the consequences of the demonetisation of 500-rupee and 1,000-rupee notes?
It’s a good gesture which signals the government’s seriousness about tackling black money. As of now, we don’t know what the final consequences of this move will be. I can see two positives and many negatives. First, it puts an end to the fake currency problem and, second, it nudges the economy towards the recorded transactions rather than illicit ones that used to take place in cash. The question is whether the policy makers really factored in the rural and agrarian economy of this country while framing this policy. This policy confuses cash with black money. Not all cash is black and not all black money is cash.

I have not heard a single economist say that it is a sensible economic policy. It has been poorly executed. Clearly the government was not prepared for this transition. It had not anticipated the kind of havoc it would wreak on our economy.

It was sad that people died of shock and in the queues?
Yes, about 56 people have died so far as a result of the trauma triggered by this policy. When you do something on such a large scale, you have to plan for all possible consequences. The government does not seem to have anticipated them or planned the policy execution. Mr Modi might have got his politics right but has got his economics horribly wrong.

What was the ideal stand for the opposition on this issue?
Bharat bandh to protest against demonetisation is a not a wise political move. Opposition to the policy per se may not go down well with the people. I agree that it is a bad economic policy, yet the man in the street thinks it will eventually benefit him.

But the common man’s support could be ascribed to his ignorance, right?
Yes, but that’s what politics is all about. You deal with people as they think. You don’t invent them. So the right way to oppose the policy would be to ask what else needs to be done to curb the black economy instead of focusing on the inconvenience caused by this policy.