Current state of Indian economy does not permit demonetization

Visakhapatnam December 16 : Economist and former professor of Jawaharlal Nehru University Prabhat Patnaik alleged on the demonetization issue.He said that, "The present state of Indian economy does not permit demonetization. In the present context, it is an absurdity". He also added that it will lead to decimation of the informal sector.He further said that, the highly critical of the government s argument, that it was intended to check black money and weed out counterfeit notes from the market, he said it was like administering a very powerful antibiotic for treating a small ailment. Demonetization was used as a tool in many countries such as Venezuela, where the inflation rate was over 500 per cent.Delivering a lecture on Economic reforms, demonetization and the insurance sector , organised here on Wednesday by the Visakhapatnam Insurance Institute, Prof. Patnaik pointed out that demonetization would not only give short-term pain to the people but also effect the economy in the long run. It, therefore, should be resisted by all sections of society, he said. Moreover, demonetization is not necessary to check circulation of counter-fit currency notes. The old high-value notes could have been withdrawn in a phased manner. For a while, both the old and new notes could have been legal tender. In fact, the UPA Government did it with some notes, he pointed out.