But for demonetisation, the economy would have collapsed: S S Gurumurthy

Commenting on the stand-off between the RBI and the government, Gurumurthy said that it is not a happy thing at all. He indicated that differences could be a result of considering only the American system as the perfect ecosystem.

RBI’s independent director S Gurumurthy, who was delivering a lecture on ‘State of the Economy: India and the World’ at the Vivekananda International Foundation (VIF), said that demonetisation was a corrective measure and the GST was a reformative one.

Gurumurthy who was appointed to the board of RBI governors few month ago, said that 18 months prior to demonetisation, 500 rupees, 1,000 rupees (notes) rose to 4.8 lakh crore that is what funded the real estate and gold prices and we would have gone the same way, (as what happened in) 2008 in the US due to sub-prime lending. The economy would have collapsed but for demonetisation.

He said that people of this nation should be congratulated because they stood in the queues to collect the new notes. They put faith in the government while the media and the economists were finding faults. He said that fault-finding is the job of opposition and experts and media should not do that. He expressed disappointment that there is no economic discourse in the country and not political discourse is there.

- Advertisement - - Article resumes -

Gurumurthy also said that India is not a market-driven economy like the US where the stock market is the prime mover, while the banking industry is a subordinate player. He said that in the US, 75% of the money comes from the stock market while in India only 3% of the savings go into the stock market. But our policymaking is based on the US model. “So in a bank-driven economy, if you restrict the banks, you are restricting the economy. You are restricting the flow of funds into the economy,” he said.

He criticised the government’s decision of giving up the right to print money in 2002. The only way in which Indian Rupee gets generated is when the RBI acquires dollar coming into India, it prints the Indian rupee in exchange for the dollar and gives it to banks.

He said that demonetisation and the GST hit the small and the medium enterprises the most. “We need proper discourse in Delhi because that’s where the action is”. Gurumurthy said the country has been following an “utterly wrong import policy” of having capital goods import exceeding oil imports. “We need to go in for heavy import restrictions. We have got to cut down the current account deficit and trade deficit in the next one year,” he said.

Commenting on the stand-off between the RBI and the government, Gurumurthy said that it is not a happy thing at all. He indicated that differences could be a result of considering only the American system as the perfect ecosystem.

“But I think an alternative is necessary and exists also. That is part of an overall correction of the Indian mind,” he said.

Share and Support:
Support OpIndia by paying for content

Most read articles recently

Ghaziabad: Stray dog, mother of five puppies, raped and dragged to death by Nafees and Tauseef

Nafees, one of the accused, has reportedly confessed to the crime of raping the animal several times before dragging her through the streets

Here is what connects attack on Akshaya Patra, French NGO against Rafale and demonization of Amarnath Yatra

The web of foreign-funded NGOs that demonised the Amarnath Yatra, French NGO that complained against Rafale in France and the demand to remove Akshaya Patra from midday meals contract

Activist opposing Akshaya Patra’s mid-day meal contract thinks ‘Brahmins obstruct India’s development’

The Akshaya Patra has come under criticism recently for not including onion and garlic in its mid-day meals for school children.

Loans waived by Congress govt in MP, but here are the ‘conditions apply’ that farmers should see

One of the main poll promises in the run-up to 2018 elections was farmer loan waiver. Rahul Gandhi and all Congress leaders harped on farmer loan waiver.

Rajasthan Police ends up declaring a true incident as ‘fake news’ on Twitter

In a video being widely shared, a person can be heard complaining about 'Aurangzeb Rule' in Rajasthan and the people sharing the video claim it is from Utambar, Rajasthan.

All you need to know about Congress’ Chhattisgarh CM elect: Bhupesh Baghel, who was once jailed in sex CD case

Congress leader and Chhattisgarh CM elect Bhupesh Baghel is currently out on bail in sleaze video case

Zee News issues defamation notice of Rs 1000 crore to Congress leader Navjot Singh Singh

Sidhu had allegedly threatened the Zee News when he had said “nani yaad dila denge” after Zee News had shown a video ‘Pakistan Zindabad’ slogans were raised at an election rally

#GoBackSonia trends on Twitter ahead of Sonia Gandhi’s Tamil Nadu visit to inaugurate Karunanidhi’s statue

Twitter is abuzz with #GoBackSonia trend as Sonia Gandhi is going to Chennai to inaugurate the statute of DMK founder Karunanidhi.

After spreading negativity during Diwali, Times Now is in a festive mood during Christmas

Times Now's tweets reflect the general attitude of the Indian elite towards Hindu festivals. While everything negative is associated with Hindu festivals, an aura of celebratory mood is spread on the occasion of Abrahamic festivals.

Debt ridden farmers receive recovery notices in Karnataka even as Rahul Gandhi claims state had waived farmer loans

The Congress party's promise of loan waiver in Karnataka seems to be a hoax as farmers are being constantly harassed with notices to repay the loans.

Latest articles

Connect with us

125,779FansLike
98,237FollowersFollow
6,368SubscribersSubscribe

Don't miss these