Despotic and authoritarian" is how Nobel Laureate and Bharat Ratna Amartya Sen describes the decision to abruptly ban 500 and 1000-rupee notes. "The alleged objective of dealing with black money is something all Indians would laud. But we have to ask whether this is the good way to do it? This decision is about minimal achievement and maximal suffering," Dr Sen said, appearing from Harvard University on NDTV's The Buck Stops Here.
Dr Sen was honoured with the Bharat Ratna during the NDA tenure of Atal Bihari Vajapyee.Making the case that only a very small percent of black money is held in cash "about six percent and certainly less than ten percent," Dr Sen said that demonetisation is "small fry in terms of achievement but a big disruptor to the Indian economy."
Like other critics of the PM's initiative, he said he backs the intent but faults the execution of the reform, "We all want something to be done about black money. But surely, it also has to be intelligent and humane. That has not happened."With new bills in short supply, banks run dry early in the morning. ATMs are still being reconfigured to be able to stock the new notes which are of a larger size. Rural India, cut off from formal banking, is especially short-changed, though many say they support the PM's new scheme.
Asked why he used a sweeping adjective like "despotic" to descri be an economic policy which is drawing both positive and negative reviews, Dr Sen explained: "Despotic in the sense that it breaks down trust in the currency." Making the argument that the rupee is a promissory note, the noted economist said that for the any government to not honour it is to renege on a basic promise. "If suddenly a government says we won't pay you, that is despotic.
I am not a fan of capitalism but...trust is key to capitalism; this goes against trust altogether. There is a potential danger of undermining the economy and the very basis of capitalism. Tomorrow the government could do the same with bank accounts and not allow anything above a certain amount unless people prove they are not racketeers."