Nobel Laureate Abhijit Banerjee had warned India against demonetization and sanghis are not happy

• As part of note swap programme, almost 90% of India's cash was taken out of circulation by Modi’s government.
• Banerjee said demonetization policy seemed more like a penalty on those who were holding large quantities of cash.
• Nobel Prize winner raised concerns over "political interference" in statistical data by Indian government.

(Karachi) Indian Economist Abhijeet Banerjee, who won the Nobel Prize for Economics 2019, had reportedly warned the Indian government of ill effects of currency note swap programme.

Banerjee criticized the Modi government for demonetization programme that was initiated in 2016. Almost 90% of the country's cash was taken out of circulation.

He said the pain would be much greater than was initially anticipated as many people feel the current economic stress has its roots in demonetization.

He maintained the motive of the policy was to reduce corruption, but the value of the highest-denomination bill was doubled. He added when the denomination value increased, it was easy to pay people illegally.

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Abhijeet Banerjee said the demonetization policy seemed more like a penalty on those who were holding large quantities of cash at the time without affecting the future incentives for corruption. He said that demonetization created hardship for the Indian government and affected the poor and middle class alike.

He termed demonetization as one of the major causes of poverty in the country. "Indian economy is on a shaky ground and the data currently available do not hold any assurance for the country’s economic revival anytime soon," Banerjee told an Indian news channel from the US.

Banerjee was also part of a group of 108 Indian and foreign economists and social scientists who raised concerns over "political interference" in statistical data by Narendra Modi's government.

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India had been facing economic crisis for the past many years and the demonetization policy was a big blow to its economy and financial status.

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“There was the potential cost of a massive liquidity crunch, in which the volume or number of economic transactions reduces due to insufficient cash holdings. The brunt of this cost was borne by the informal sector, where 85% or more of the Indian labour force is employed, as transactions here have been traditionally carried out in cash,” Banerjee said in a paper jointly authored with Harvard University’s Namrata Kala.

He also hurled criticism over Congress-led UPA Party and said if it comes into power then the Nyuntam Aay Yojana (NYAY) scheme would be funded by imposing new taxes in the country amid wide fiscal deficit.