New Delhi : Describing demonetisation as an attempt ‘akin to striking a rock with an egg’, eminent Austrian economist Heinz D Kurz has said it is ‘much too weak and misdirected an instrument’ to root out corruption.
Actually, he said, the Indian government’s move opened up new avenues of corruption.
“As far as I understand the situation, the policy of demonetisation has already been abandoned by the government, because it turned out to be an attempt akin to striking a rock with an egg. “I strongly doubt that the demonetisation exercise will root out corruption and engender more transparency. It is much too weak and misdirected an instrument to achieve these goals,” Kurz told PTI in an interview.
“By introducing the Rs 2,000 banknote, a currency of twice or even four times the value of the banknotes that have been declared illegal, in the system… This can hardly be called demonetisation,” he added. Kurz is a professor of economics at the University of Graz, Austria. Noting that while the goal of fighting corruption is laudable, he said: “I consider it to be singularly naive to think that this can be done by banning some banknotes.
“There appears also to be evidence that the policy of demonetisation opened new channels of corruption.” Kurz pointed out that whoever was informed about the demonetisation policy ahead of its introduction (sort of insider trading) could have used the information and laundered money. Also, he further said Rs 500 and Rs 1,000 banknotes brought to banks were apparently counted, but not scrutinised as to whether it was ‘counterfeit money’.
Asked about impact of demonetisation on India’s economic growth, Kurz said that “first, it is much too early to assess already the impact of demonetisation, which will show up only later. Secondly, the data published are rough estimates that do not, and could not possibly, take account of this impact”. “It would therefore be wrong to infer that demonetisation had no effect on the economy,” he noted.