Arvind Subramanian, former Chief Economic Adviser (CEA) has reportedly termed demonetisation as a “massive, draconian, monetary shock” in his upcoming book, Of Counsel: The Challenges of the Modi-Jaitley Economy.
The Indian Express reported Subramanian, in a chapter specifically devoted to demonetisation, describes how that economic growth fell significantly in the quarters following the move.
In the chapter titled The Two Puzzles of Demonetisation — Political and Economic, Subramanian reportedly writes, “Demonetisation was a massive, draconian, monetary shock: In one fell swoop, 86 per cent of the currency in circulation was withdrawn. The real GDP growth was affected by the demonetisation. Growth had been slowing even before, but after demonetisation, the slide accelerated.”
He added, “…In the six quarters before demonetisation, growth averaged 8 per cent and in the seven quarters after, it averaged about 6.8 per cent (with a four quarter window, the relevant numbers are 8.1 per cent before and 6.2 per cent after).”
Subramanian was appointed as the CEA in October 2014 for a three-year term. He received an extension to his tenure (to up to May 2019) in September 2017. However, in June 2018 he announced his resignation, citing family commitments.