Lawrence Summers says demonetization only caused chaos

By Raaghav G R

Posted on November 22, 2016

One of the top global economists, Lawrence Summers today morning said that demonetization is unlikely to have lasting benefits unless followed up by new measures soon. He said that demonetization so far, has only caused chaos and loss of trust in the government. “Like everyone else, we were surprised by the dramatic action taken by Indian Prime Minister, Narendra Modi to demonetize the existing Rs 500 and Rs 1,000 currency notes. This is by far the most sweeping change in currency policy that has occurred anywhere in the world in decades”, Lawrence Summers said. Lawrence Summers was a former chief economist at the World Bank and ex-economic advisor to the US President, Barack Obama. He said that most of the police force in the world would rather let a thousand criminals escape than convict an innocent man. “In the same way, for the government to expropriate from even a few innocent victims who, for one reason or another, do not manage to convert their money, is highly problematic”, Lawrence Summers said. “Moreover, the definition of what is illegal or corrupt is open to debate given the long-standing commercial practices in India”, Lawrence Summers added. Read more on PM Modi

“We strongly suspect that those with the largest amount of ill-gotten gain do not hold their wealth in cash but instead, have long since converted it into foreign exchange, gold, bit coin or some other store of value. So it is petty fortunes and not the hugest and most problematic ones that are being targeted”, Lawrence Summers said. “Without new measures to combat corruption, we doubt that this currency reform will have lasting benefits. Corruption will continue albeit with slightly different arrangements”, he added. “We were not enthusiastic previously about the idea of withdrawing existing notes from circulation because we judged the costs to exceed the benefits. The ongoing chaos in India and the resulting loss of trust in the government fortify us in this judgement”, Lawrence Summers concluded.

It is true that ever since the demonetization, people have been rushing to banks and ATMs to withdraw or exchange their money. This has created serpentine queues in front of banks and ATMs and has caused delays to people. But we go with PM Modi’s opinion that this move is for the greater good of the Indian economy. People with crores of black money will be forced to deposit their money in banks to get access to legal currency notes. There is also the news that PM Modi will take steps to retrieve black money in the form of gold, silver, commodities, properties or shares in India in a few days! (Read the article going to be published on our website http://15.206.81.253 tomorrow (23/11/2016) for more details) So that makes Lawrence Summer’s argument invalid! Moreover, the RBI had already announced a week back that people who do not manage to convert their demonetized Rs. 500 and Rs. 1000 notes within the given deadline on December 30^th, 2016, will be able to exchange their demonetized currency notes at specified branches of the RBI after the deadline. So the common man or ‘innocent citizens’ as Lawrence Summers calls them, will not be affected! That makes another one of his arguments invalid! Knowing that Lawrence Summers is experiencing nothing more than a case of jealousy and stomach burn, we are all eager to see how our honorable PM, Narendra Modi will retrieve black property in India. We salute PM Modi for having taken a bold and intelligent move like demonetization and are sure that this move will do greater good to the Indian economy. Read more on Startup News

Lawrence Summers says demonetization only caused chaos