Demonetisation won’t have lasting benefits: Larry Summers

Former U.S. Treasury Secretary terms the bank note withdrawal as the “most sweeping change in currency policy that has occurred anywhere in the world in decades”.

Former U.S. Treasury Secretary Larry Summers. File photo

Former U.S. Treasury Secretary Larry Summers has said that the Narendra Modi government’s demonetisation move would not have any lasting benefits

In a blog post, co-written with Natasha Sarin, a PhD scholar at the Harvard University, Mr. Summers said, “Without new measures to combat... corruption will continue albeit with slightly different arrangements”.

 

Terming India’s demonetisation move as one of the “most sweeping change in currency policy that has occurred anywhere in the world in decades”, Mr. Summers said, “…For the government to expropriate from even a few innocent victims who, for one reason or another, do not manage to convert their money is highly problematic.”

 

“We strongly suspect that those with the largest amount of ill-gotten gain do not hold their wealth in cash but instead have long since converted it into foreign exchange, gold, bitcoin or some other store of value. So it is petty fortunes, not the hugest and most problematic ones, that are being targeted,” Mr. Summers, currently Charles W. Eliot Professor and President Emeritus at Harvard, said.