Demonetisation: Two Nobel laureates come out in support, say cashless is boon

At a time when the Narendra Modi government is battling increasing reports on demonetisation's negative impact on the consumption and economy, two Nobel laureates have come out in support of the scheme - Muhammad Yunus, founder of Grameen Bank, Bangladesh, and French economist Jean Tirole.

According to separate reports in The Hindu (read here and here), both economists have said that cashless economy is a boon and that it will kill black money and corruption.

Muhammad Yunus. File photo

Muhammad Yunus. File photo

Both the economists are in India at present. While Yunus was , who won the Nobel Peace Prize in 2006, was in Visakhapatnam to attend an international symposium, Tirole, who won the Nobel prize for economics in 2014, was in Kolkata to deliver Dipak Banerjee Lecture at Presidency University.

Talking to the newspaper, Yunus said: “Demonetisation kills black money and has increased liquidity.”

However, he said for a successful shift to cashless model, there should be incentives.

"Most important, demonetisation has brought the rural and unorganised sectors into the banking fold," Yunus has been quoted as saying in the report.

Meanwhile, Tirole has added a note of caution syaing the poor, who are the most dependent on cash, should not be made to suffer.

“People want to get rid of cash for several reasons," Tirole said explaining the rationale behind the move at Scandinavia, Denmark and Sweden. According to him, these countries are trying to get rid of cash because "it is more convenient".

For him, the reason for the Indian government's move is "to get rid of corruption”.

Prime minister Narendra Modi, while announcing the decision to demonetise Rs 500 and Rs 1,000 notes, had said that the move was aimed at curbing corruption, black money generation and terror funding. There was no mention of shift to cashless economy as an objective.

However, in a later speech the prime minister had psuhed for less-cash, if not cashless, economy, which would curb corruption.

Updated Date: Jan 06, 2017 12:20 PM

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