Note ban: SC has settled the legality but not the debate
SummaryLeaving aside the economic case, even the court’s verdict has at least two troubling aspects.
A Harvard professor and former chief economist of the International Monetary Fund published a book, The Curse of Cash, in September 2016. His timing could not have been more momentous. Two months later, Prime Minister Narendra Modi announced on national television the radical decision to demonetize 86% of India’s cash. It looked like India was taking Kenneth Rogoff’s recommendation to heart. He had contended that large-denomination notes aided corruption, crime and tax evasion. So Rogoff became a sought-after expert on TV and radio shows, opining about India’s drastic note ban. He clarified that his advice was meant for developed economies and not developing ones like India, where only 5% people pay income tax and cash is critical for vast sections of the economy. He urged extra caution for India to go cashless. In any case, his recommendation would have been to discontinue high-value currency but with a long grace period of 12 months, say, and not abruptly in just four hours.