One of the biggest monetary reforms undertaken by the NDA government in the form of demonetisation of Rs 500 and Rs 1000 notes, is only a half measure attacking the black money in the country. The move requires additional measures in the form of reforms in taxes, governance and electoral process, former Reserve Bank of India governor C Rangarajan informed here on Friday.
Speaking on the sidelines of a lecture on "Journey of India's Reforms" at the Indian Institute of Management - Ahmedabad (IIM-A), Rangarajan maintained that the latest demonetisation measure is a half reform.
"Demonetisation can't be a standalone measure. One has to look at the sources through which industrialists create unaccounted income. There are bureaucrats and there are politicians who generate the unaccounted income. We need to address the motivation behind all these three groups," stated Rangarajan explaining the reforms to bring transparency in governance, tax administration and the electoral system.
Commenting on the global economic scenario and its possible impact on India, Rangarajan - without naming the countries, stated that developed countries have adopted protectionist stance to safeguard local industries and employment, hence there are going to be difficult times ahead of emerging economies.
"There is a growing tendency in the advanced economies these days of protection. They feel that jobs have been taken away from their countries and these have been seized by the developing economies," said Rangarajan, flagging difficult period ahead of us as a result of it.
"But there are sufficient safeguards even in these (developed) countries, which will not allow them to go too far. They are all members of World Trade Organisation (WTO). Therefore the restrictions on imports cannot be made in an arbitrary way," he said adding that concerns will be more on the services sector.
"There are areas like services sector, where migration issues are also involved. Therefore, they may act. But we can only hope that a good sense prevails and they will realize that pursuing such policy will undercut their own country. It is not as if, it is a matter of charity. The immigrants in those countries have helped them grow. Hence, an idea of shutting them off to make economy grow faster is a wrong idea," said the former economics teacher at IIM-A.