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Demonetisation Not So Bad After All: Paul Krugman

Author: Swarajya Staff
Publication: Swarajyamag.com
Date: July 6, 2017
URL:   https://swarajyamag.com/amp/story/insta%2Fdemonetisation-not-so-bad-after-all-paul-krugman

Nobel laureate Paul Krugman, who said demonetisation will do no good for India – long term or short term – had to eat his words when he now said that the impact was not as bad as everyone feared.

“There is a lot of collateral damage. But we can say that the damage to the economy is not as bad as some of us feared,” he said in an interview to the Economic Times (ET).

“When it happened, my first reaction was, if I had to guess, the economy would shrink in proportion to the reduction in the monetary base. That did not happen, which is a good thing.”

"Seems like a highly disruptive way to deal with the problem of illicit hordes of cash, though it is not clear what significant long terms gains will come of it," Krugman had said back in December 2016.

Though he termed the DeMo exercise a “shock therapy that was not well advised”.

Calling Prime Minister Narendra Modi’s economic policy “less dramatic than people had imagined”, he, however, said the goods and services tax (GST) is the right kind of thing.

Comparing Modi to Japanese Prime Minister Shinzo Abe, he said though Abe is a nationalist, he has done a lot of good for the country’s economy, and despite his social conservatism, has done a lot for women in Japan.

“I felt that there is some of that here, the odd mix of assertiveness and slight authoritarian tinge, but then reasonably effective but in some ways oddly socially progressive policies.
 
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