Economy not to grow beyond 6.5 per cent for next 2 fiscals due to demonetisation, says Chidambaram

Terming the demonetisation as “ill-conceived”, former Finance Minister P Chidambaram on Sunday said the economy won’t grow at more than 6 to 6.5 per cent for the next two fiscals due to the damage caused by the move.

Former RBI Governor Raghuram Rajan had categorically rejected the idea of demonetisation, he claimed, adding that NDA government “must have consulted some RSS pracharak” before taking the decision.

Speaking at the second anniversary function of Telugu daily ‘Mana Telangana’ here, Chidambaram said the economy will suffer a setback of Rs 1.5 lakh crore as 80 per cent of the Small and Medium Enterprises had closed down.

“If ten per cent of bank officers were dishonest earlier, thanks to demonetisation, 50 per cent of the bank officers became dishonest. So the very exercise generated more corruption, not less corruption. So they changed the narration to cashless economy now,” he said.

“...you take it from me, the economy will not grow at more than 6 and 6.5 per cent in 2017-18 and 2018-19. It will take two years for the economy to recover. People have lost confidence in currency. People are not spending.

“You have unnecessarily interrupted the economic story of this country by this thoughtless, ill-conceived demonetisation,” Chidambaram said.

Earlier, addressing a meeting of Telangana Pradesh Congress Committee, the senior Congress leader said those who should have been consulted were not consulted before taking the decision.

“The finance secretary was not consulted, the banking secretary was not consulted and the Chief Economic Adviser was not consulted, and then who was consulted? They must have consulted some RSS pracharak,” he alleged.

Several past RBI governors had disapproved of the idea, he said.

“We had Raghuram Rajan as Governor for three years, he did not think demonetisation was the answer and he categorically told the Government no, don’t do demonetisation. Then a new Governor comes and in 64 days he agrees for demonetisation.”