Former RBI governor C Rangrajan, today said that the policy of demonetisation lacked adequate preparation. If the authorities had taken proper measures then the problems faced by the people could have been avoided.
The former Chairman to Economic Advisory Council of ex Prime Minister (PM) Manmohan Singh directly blamed the decline in economic growth to demonetisation and GST.
Speaking on the sidelines of a gathering of Assocham the former RBI governor said that the result of demonetisation would have been different if currencies were made available in proper quantity.
India should grow at the rate of 7 per cent for the remaining three quarter in order to maintain the overall growth at 6.5 per cent for the current fiscal.
On the government's decision of stimulus package to boost the economy, Rangrajan said that it should be used to focus on recapitalisation of the public sector banks (PSBs).
The PSBs in turn would help and finance the private sector investment which will ultimately help to revive the economy. Any incomplete projects should be completed and the government should focus on increasing capital investment, said the former RBI governor.
It should be noted that on November 8, 2016 in a televised address to the nation the Prime Minister (PM) announced that Rs 500 and Rs 1000 curency notes will seize to be legal tender from midnight.
Following this, there was a massive cash crunch in the economy. Long queus followed in banks and ATM counters. Many small enterprises were wiped out due to lack of money supply.
The step was envisaged as a measure to wipe out the concentration of counterfeit notes that has been flowing in the monetary system of the economy and also to bring that part of money that was still unaccounted for.