Efficient tracking like Aadhaar can curb black money: Raghuram Rajan

Former Reserve Bank of India Governor Raghuram Rajan on Thursday said demonetisation that has come at a huge cost can have a chilling impact on Indian economy.

Raghuram said an unprepared note ban can see a dramatic slowdown and also put companies out of business."The RBI's concern that costs of demonetisation will outweigh benefits was conveyed to the government. RBI offered an opinion on alternative approaches to note ban," Rajan said.

Talking about Aadhaar, Rajan said "I like the process of getting everybody to sign on to their accounts with the Aadhaar number adding that efficient tracking like Aadhaar can curb black money.

The former RBI Governor, currently professor of finance at the University of Chicago, was speaking at an event to launch his book 'I Do What I Do'.

"A committee was set up and started the process of discussion. In my view, it never came back to us. In fact the GDP and informal economy have both suffered due to note ban and demonetisation hasn't been able to identify black money hoarders.

The RBI had started the process of designing new notes and the new notes - 2000, 500 and a new 1,000 - had been approved in May. To say none (of notes ban prep) was done would be incorrect. But, a monetary economist would've liked for all the notes to replaced at one go," reports ANI.

We don't yet know the full effects of demonetisation. Entire data on demonetisation is not available, based on the information that we have now, ignoring future dividends, the answer is fairly obvious. He, however, said that cost of demonetisation was 1-2 per cent of the GDP.

On relation between RBI and finance ministry, Rajan said that tension between RBI and Finance Ministry has always been there.

On question that if a farmer defaults tractor loan then he is caught but big corporate defaulters can't be touched, Rajan said this should be changed.

OneIndia News