#NoteBanAnniversary: Ex-finance secretary says Rs. 2,000 notes can be demonetized
What's the story
Exactly three years ago, Prime Minister Narendra Modi addressed the nation and wiped off Rs. 500 and Rs. 1,000 notes, making way for new Rs. 500 and Rs. 2,000 notes. Demonetization affected our economy, which is still reeling from the effects of this ill-thought through plan. And now the former Finance Secretary has said that Rs. 2,000 notes can be banned, without causing "disruptions".
Note
Former Finance Secretary wrote note underlining reforms needed for economy
This idea was floated by former Finance Ministry Subhash Chandra Garg, who had taken voluntary retirement after he was shifted out of the Finance Ministry, earlier this year. He left office as Power Secretary on October 31. But before leaving office, Garg penned a 72-page note featuring nearly 100 reforms to steer the sinking economy. Senior functionaries of government have been given this note.
Suggestions
De-nationalize PSUs, manage own debt: Garg told government
One of the suggestions which Garg listed was the de-nationalizing of Public Sector Undertakings and focusing on privatization. He also advised that the government should manage its own debt, rather than relying on the RBI. Garg pointed out that "India's fiscal management system uses practices that are not sound and stable and runs levels of deficits and debt which are high and unsustainable."
Details
According to Garg, high debt levels are hurting ratings
Further, Garg said the high debt levels are affecting India's credit ratings. He claimed bank consolidation should have no effect on "expansion of credit". He also wrote, "Payment of food subsidies by extending loans from NSSF, deferring of fertilizer subsidies by enabling availing of loans from banks — all this needs to be discontinued and merged in the goal of 3 percent."
Demonetization
Rs. 2,000 notes aren't in circulation, can be banned: Garg
Notably, the most interesting insight which Garg gave pertained to Rs. 2,000 notes. "A good chunk of Rs. 2,000 notes are actually not in circulation, having been hoarded. Rs 2,000 note, therefore, is not presently working as a currency of the transaction. It can be demonetized, without causing any disruption," he wrote. Will the government accept his suggestions? We'll have to wait.