Ashok Gulati Refutes Reports Of Demonetisation Hitting Farm Supplies Hard

Ashok Gulati, Infosys Chair professor for agriculture at the Indian Council for Research on International Economic Relations, has termed demonetisation as Prime Minister Narendra Modi’s boldest economic and political reform so far. Writing in the Indian Express on Monday (21 November), Gulati says that this is perhaps the first time that an honest person was given dignity and a premium was put on honesty. However, he does caution that if the inconvenience for the common man lingers for long, it can sour the mood.

Gulati also called bullshit on media reports telling us that “volumes of fresh produce in agri-mandis have dropped significantly, trucks have stopped plying, and farmers are in deep distress”. He said that while there is some truth to it, the claim is largely exaggerated. If what media is reporting was indeed the case, consumers in urban areas wouldn’t be getting their daily essential commodities at regular prices, and there would have been long queues to buy daily essential goods. This is certainly not the case. In fact, Gulati is even noticing a significant behavioural change with more and more people taking to online or card transactions.

Gulati calls for expediting the transition to a cashless economy. He suggests the following steps:

1. The state governments should announce that every commission agent in all agri-mandis must have electronic data capture (EDC) machines for swiping credit or debit cards. Those who don’t comply should have their licenses cancelled.

2. The state governments should lower the stamp duty in real estate transactions by half. This move, Gulati believes, will not hit revenues, and will instead encourage honest people to transact honestly.

3. In the short term, Gulati recommends staying vigilant on unaccounted black money flowing into Jan Dhan accounts. He calls for catching a few culprits in the act and delivering firm and quick punishment to them so that a message is sent before it’s too late.

4. High priority should be given to re-calibrate ATMs for new notes, extending working hours of banks, continuing employee shifts 24×7 especially for the withdrawal of money by people from their accounts and opening special extension counters through, say, mobile vans.