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Demonetisation Was Inevitable, But Raghuram Rajan Would Never Have Agreed To It: Gurumurthy

S Gurumurthy says demonetisation could be a major beginning towards a structural change in the Indian economy. (CNN-News18)

S Gurumurthy says demonetisation could be a major beginning towards a structural change in the Indian economy. (CNN-News18)

Sangh ideologue S Gurumurthy has said that demonetisation was an inevitable step that former RBI governor Raghuram Rajan wouldn’t have agreed to, and therefore it could not have been done till after the change of guard at the central bank.

New Delhi: Sangh ideologue S Gurumurthy has said that demonetisation was an inevitable step that former RBI governor Raghuram Rajan wouldn’t have agreed to, and therefore it could not have been done till after the change of guard at the central bank.

“Obviously Rajan wouldn’t have supported it,” Gurumurthy told News18 on the sidelines of a talk he gave on demonetisation in New Delhi on Monday.

However, when asked if Rajan was made to leave because of demonetisation, he replied in the negative.

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He said that although Rajan was a good economist, he didn’t understand India. He could not have diagnosed that it was necessary to demonetise Rs 500 and Rs 1,000 banknotes to flush out black money, the Sangh ideologue said.

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Gurumurthy, whose voice is taken very seriously in the policy-making circles, said that the objective of demonetisation is to record unrecorded roaming cash. Demonetisation could be a major beginning towards a structural change in the Indian economy, he said.

The quantum jump in illicit cash in the economy has fuelled an asset price bubble in gold, stocks and real estate, which is being reflected as high GDP growth in the UPA years and continuing till now. However, that growth couldn’t create jobs because it was black money spirited out of India and round-tripped back in the form of investment in assets, he said.

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Demonetisation was therefore inevitable and it would have been too late to take this step five years later because the quantum of black money would have increased manifold and the economy would have collapsed. Black money was inhibiting the creation of mass employment and inflating asset prices while at the same time promoting consumption among a small section of the population, he said.

The votary of swadeshi economics said that Prime Minister Narendra Modi had told him that the aim was not a cashless, but a less-cash economy.

Calling demonetisation as “Financial Pokhran”, Gurumurthy said that just like the 1998 nuclear blasts made India a strong nation, demonetisation also has the potential to put India on a high quality growth path.

He said the government headed by AB Vajpayee created 60 million jobs between 1999 and 2004. “The real story of growth began in 1999 and not in 1991 with reforms,” he said. But the next six years under the UPA saw meagre job growth when the economy was growing above 8%.

Gurumurthy said that the Gandhi family, which presided over the UPA government, had nothing to do with India.

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