Manmohan Singh vs Arun Jaitley: War of words on demonetisation 

MMS: Demonetisation was a reckless step and none of its objectives were achieved. I am afraid that a pretentious pursuit of a ‘less cash economy’ to justify a fundamentally flawed act neither recognises nor solves these twin economic challenges. It is imperative that we move beyond the rhetoric and politics of demonetisation and come together to find solutions to our challenges of employment and equality.

AJ: One of the important objective of demonetisation was to make India a less cash economy and thereby reduce the flow of black money in the system. The reduction in currency in circulation from the base scenario reflects that this intended objective has been met.

MMS: What is important is that the current economic slowdown triggered by a liquidity shock due to demonetisation was needless and entirely self-inflicted. Such a shock may be temporary in nature but can have a lasting damage on the weaker sections of our society and industry.

AJ: We, the Indians, were forced to live with this attitude of “chalta hai” with respect to corruption and black money and the brunt of this attitude was faced particularly by the middle class and lower strata of society. It was a hidden urge of the larger section of our society for a long period to root out the curse of corruption and black money; and it was this urge which manifested in the verdict of people in May 2014.

MMS: Time for politicking over demonetisation is over now. Economics should take precedence over politics. Compliance requirements under GST have become a nightmare for small businesses.

AJ: Demonetisation appears to have led to an acceleration in the financialisation of savings. In parallel, there is a shift towards greater formalisation of the economy in the near term aided by the introduction of Good and Services Tax (GST).

MMS: I sincerely hope demonetisation was just an economic blunder and not a harbinger of institutional erosion. Overriding institutions, circumventing consensus, and haste are what made the demonetisation decision possible. Therein lies the lessons of governance and nation-building. A truly liberal society is one that strives to ensure that not even a single innocent is punished unfairly. The role of institutions is vital in ensuring such order. It is indeed time to move on from demonetisation but not move away from institutions, procedures and processes.

AJ: In an overall analysis, it would not be wrong to say that country has moved on to a much cleaner, transparent and honest financial system. Benefits of these may not yet be visible to some people. The next generation will view post November, 2016, national economic development with a great sense of pride as it has provided them a fair and honest system to live in.