Economic commentators should be clear on the monetary economics of the policy. Unfortunately, there has been more obfuscation than enlightenment
In this space a fortnight ago (Fixing The Plumbing—Of Our Political Economy, 5 December), I had argued that the Narendra Modi-led government’s currency swap (popularly, but misleadingly, referred to as “demonetisation") constitutes a classic political economy trade-off: between the short-term costs of the policy and its medium- to long-term benefits. These putative gains and losses may be construed both economically and politically. Last time, I explored both of these, laying stress on the latter, arguing that Modi’s method may be understood as trying to “fix the plumbing" of the economy, the currency swap being but one element of this.