Demonetisation was good concept with deeply flawed : Noble Laureate Richard Thaler

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New Delhi : After demonetisation completed its one-year anniversary, Nobel laureate economist Richard Thaler said that although the ban of high-value currencies was a ‘good’ concept, its execution was “deeply flawed”. Thaler further says that the move to introduce Rs 2,000 notes during the remonetisation exercise was “puzzling” and undercut the purpose of the note ban. Mr Thaler, a Professor of Economics and Behavorial Science at the University of Chicago, won the Nobel Prize in Economic Sciences earlier this year.

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Mr Thaler clarified his stance to his student Swaraj Kumar from the Chicago University, in an email exchange, which both of them tweeted. Kumar sent a mail asking, “After the announcement of Nobel committee, your tweet on India’s demonetization got a lot of attention and many people are quoting it to support the whole exercise. I know that you have suggested in the past to demonetize higher denomination to reduce corruption and to move towards a cashless society. But I was wondering what’s your thoughts on the execution like demonetizing 86% of the notes in circulation and only 50 days for the note exchange?”

Reuters images

“The concept was good as a move to a cashless society to impede corruption but the rollout was deeply flawed and the introduction of the Rs 2000 note makes the motivation for the entire exercise puzzling,” Thaler told Kumar. The twitter exchange between Thaler and Kumar was brought out by Rupa Subramanya who also tagged Thaler who retweeted her tweet.

Bharatiya Janata Party (BJP) leaders had claimed on Twitter that Thaler had supported the demonetisation of Rs 500 and Rs 1,000 notes announced by Modi on 8 November, 2016. However, even then it turned out that though in principle he supported such a move towards cashless economy, he had reservations about introduction of Rs 2,000 notes.

In 2016, when Narendra Modi had announced the rollout of demonetisation, Thaler had extended support via a tweet for the concept of demonetisation. However, the move to introduce a big denomination note of Rs 2,000 didn’t go down well with the Nobel laureate.Thaler’s initial tweet had become highlights of election speeches for many BJP leaders and one of them was Uttar Pradesh Chief Minister Yogi Adityanath who had recently praised demonetisation in a rally in Amethi. He had said, “The Nobel Prize for Economics was awarded to the economist who was the first one to welcome demonetisation.”

The BJP’s IT cell head Amit Malviya had re-tweeted Thaler’s initial reaction to demonetisation soon after the economist was announced as the Nobel winner, but did not mention his subsequent clarification.

Here is how he reacted when told about Rs 2000 note.

Sources First Post

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