Three out of four economists summoned by the Standing Committee of Finance -- headed by Congress member of parliament Veerapa Moily -- today expressed deep concern about the demonetisation policy being pursued by the Indian government.
Noted economists Kavita Rao, professor at National Institute of Public Finance and Policy, Pronab Sen, former chief statistician to the government of India and Mahesh Vyas, chairman of Centre for Monitoring Indian economy, were critical of the demonetisation process whereas Rajiv Kumar, senior fellow, Centre for Policy Research argued for it in front of the committee.
“This committee will submit its report on demonetisation on the first day of the Budget Session of the Parliament,” said a member of the committee on the condition of anonymity.
Sources confirmed to WION how the conversion of cash economy into digital would take place within the confined time declared by the central government.
All three economists who expressed concern on demonetisation spoke on the issue of counterfeit currency, inflation and black money.
The economists argued in the committee that a lot of unaccounted black money does not exist in cash and is parked in other sectors of the economy.
Sources also confirmed that three economists said that currency reform might end up spiking the inflation instead of reducing it.
Lastly, it was also argued that for a meaningful war against black money, government should have de-notified a part of the currency every two years.
The Committee has decided to call Urjit Patel, the Reserve Bank of India governor, and members of the Indian Banking Association on January 19.
The meeting was also attended by former prime minister Manmohan Singh.
Even Prime Minister Narendra Modi is expected to meet economists on December 27 to discuss the state of economy. That day, the economists in the first half will meet the Finance Minister Arun Jaitley and spend second half with the PM.
Since the exercise has become politically contested, every opinion of experts in this field counts both for the government and the Opposition.