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Noted American experts divided over India's demonetisation drive -Varghese K George

-The Hindu

Maximum government, minimum governance: Pranab Bardhan

Two prominent American economists have widely different views on India’s demonetisation drive. Harvard economist Kenneth Rogoff is of the opinion that the move will help tackle corruption and tax evasion, while Pranab Bardhan, Professor of Economics at the University of California, Berkeley, believes it cannot make “much of a dent in the long-term problem of corruption or black money.” Both of them shared their views with The Hindu through emails on Monday.  

“There is little precedent in peacetime for India’s overnight demonetisation of its two largest banknotes.  The basic idea of taking old notes out of circulation and introducing new ones is perfectly normal and sensible, but usually this is done gradually over a period of years (per the plan I propose for advanced economies in my recent book The Curse of Cash). India’s approach of forcing a rapid exchange may well succeed in penalising corrupt politicians, criminal and tax evaders far more than a gradual approach would.  But even if the move had been well prepared, the collateral damage on ordinary people would still have been significant.  The long-run effects of India’s currency exchange on corruption, crime and tax evasion may yet prove so great they will still outweigh the short-run costs but that will depend on implementation,” said Mr. Rogoff.

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