New Delhi, Dec 24 (GCCurrentAffairs) Continuing his attack on the Narendra Modi government on demonetisation, senior congress leader and former Finance Minister P Chidambaram , referring to a report by eminent economist Gita Gopinath that the government’s note ban decision shaved off economic growth by at least 2 percentage points for the October-December quarter of 2016, has said demonetisation was a crime against the economy of the country.
”After Dr Gita Gopinath’s new report, what have the quacks who proposed or defended demonetisation got to say? Demonetisation was a crime against the economy of the country,”the former Finance Minister said in a tweet on Sunday night.
According to a research paper co-authored by eminent economist Gita Gopinath,”the government’s note ban decision shaved off economic growth by at least 2 percentage points for the October-December quarter of 2016 in which the Demonetization move was effected.”
The research paper by the India-born Harvard professor Gopinath, who is set to take charge as the chief economist at the International Monetary Fund (IMF) next month, said that districts experiencing more severe Demonetization had relative reductions in economic activity, faster adoption of alternative payment technologies and lower bank credit growth.
“Our results imply Demonetization lowered the growth rate of economic activity by at least 2 percentage points in the quarter of Demonetization,” said the research paper titled ‘Cash And The Economy: Evidence From India’s Demonetization’.
The paper is published by US-based National Bureau of Economic Research (NBER) and its co-authors include economist Prachi Mishra, who had headed the strategic research unit at the RBI, Abhinav Narayanan, manager-research at RBI, and Harvard professor Gabriel Chodorow-Reich is the lead author.
According to the paper, note ban also led to a decline in nightlights-based economic activity and a 3 percentage points or more drop in employment generation in November and December of 2016 relative to the counterfactual path.