Sitaram Yechury: Demonetisation Was a Shattering Blow to the Economy

In an interview with Karan Thapar for The Wire, Sitaram Yechury, general secretary of the Communist Party of India (Marxist), criticises demonetisation and argues that it failed to achieve all the objectives that were promised by the government.

Karan Thapar: Hello and welcome to a special interview with the General Secretary of the Communist Party of India (Marxist), Sitaram Yechury, for The Writing an essay on his blog on the 7th of November, 2017, the finance minister said the demonetisation was a watershed moment in the history of the Indian economy. Not only had it fulfilled all its objectives, but more importantly he wrote, “It’s been actually a shattering blow to the chalta hai attitude of the Indian people to corruption.” Now the key question is, how do top Indian opposition politicians respond to those claims. That’s the primary issue I shall discuss today with Sitaram Yechury.

Mr Yechury, I will come one by one to each of the objectives for demonetisation outlined by the prime minister, when he announced the scheme in November last year. But first, as I said a moment ago, Mr Jaitley says this was a watershed moment in the history of the Indian economy and more importantly, it’s dealt a shattering blow to the chalta hai attitude of the Indian people to corruption.

Sitaram Yechury: It is indeed a watershed moment for the Indian economy because it is a shattering blow to the momentum of our GDP growth that was built up for over a decade now. And by this one single move, it shattered what is called the informal economy, which contributes nearly half or more to the GDP. I mean it generates more than 80% of the non-agricultural employment. All that has been completely crippled. So it is indeed a watershed; a watershed in the reverse direction. The momentum of the GDP growth has been shattered.

KT: In other words, it’s a watershed moment, but for none of the reasons that Arun Jaitley says. In fact, for precisely opposite reasons.

SY: And for none of the reasons the prime minister also enumerated, which you said you’ll come to.

KT: In fact, let’s come to the objectives, and I want to ask you, one by one, whether they’ve been fulfilled. Now when the prime minister announced demonetisation on the 8th of November last year,  one of the objectives he outlined was tackling counterfeit money. In the essay that Arun Jaitley put on his blog on the 7th of November, he says that detection of counterfeit money has almost doubled. Note that he said “almost.” Do you think that is a significant achievement, or do you think he is making a lot of very little?

SY: He is making a lot of very little and the entire blog is full of statistics. That reminds me of an old English saying, “lies, damned lies and statistics.” I mean these are meaningless in relation to the objectives that have been outlined. Let’s come down to the actual facts, the Indian Statistical Institute, at the time of demonetisation, estimated that counterfeit currency was less than 1% of the cash that was flowing.

KT: In fact 0.02%.

SY: 0.028% is their estimate. Now for that you’re making a mountain of a molehill. Now, this digital counterfeit currency cannot be controlled through demonetisation. Within days of demonetisation, you had counterfeit 2000 rupee notes surfacing in Bangalore.

KT: So you are saying 3 very important things, first of all you are saying that the Indian Statistical Institute established that the quantum of counterfeit currency is so marginal, 0.028%, that you don’t need to worry about it. Secondly, it’s not tackled through de-monetisation and thirdly, if the detection levels have only ‘almost doubled’, then you haven’t achieved very much.

SY: And you have not even been able to plug the holes, ie. how this counterfeit is surfacing, because the new notes are also counterfeited.

KT: So far from being tackled, the problem continues. Let’s come to the second objective, announced by the Prime Minister on the 8th of November last year. And that was tackling terror funding. Now, on the 4th of November, just a couple of days ago, the Home Ministry announced that what they call LWE or left-wing extremism or Naxal terror, has gone down by 21%. In August, the Minister of State for Home, Hansraj Ahir, told parliament, that terror levels in Kashmir, he called it violence in Kashmir, had actually gone up compared to last year. So the Home Ministry is saying two different things, LWE terrorism has gone down by 21%, but Kashmir violence, which includes terror, has gone up.

SY: This is again a misleading statistic.

KT: Let me complete and then you answer. Despite what I have quoted, in his essay on his blog, Arun Jaitley says and I am quoting him, “The reduction in incidence of stone pelting and protests in Jammu and Kashmir, and Naxal activities in LWE affected districts is attributed to the impact of demonetisation. Now do the facts I have quoted corroborate Jaitley, or do they actually, do the opposite, contradict him?

SY: Completely opposite, contradictory. You see, number 1, LWE and terror attacks, cannot be compared. LWE has also got a political component to it. And it is through political negotiations, political talks etc., that much of that problem has been controlled in the past, in fact, this is how it needs to be controlled (through talks).

KT: So if it’s gone down by 21% that’s not attributable to demonetisation.

SY: It’s got nothing to do with demonetisation, if it has gone down. Secondly, you take the statistics, or the data the Home Ministry gives you. Take the number of terror attacks along the LOC in J&K before demonetisation, and you take it after demonetisation – they’ve virtually doubled. Because there is a fundamental flaw in this, we must understand, Mr Thapar. The flaw is that terror funding is not done through cash transactions. Terror funding is done through sophisticated electronic means. We in Parliament had brought a new law on how to control all this. So it is actually missing the wood for the trees.

KT: So once again you are saying two very important things. First of all, any diminution in LWE extremism has got nothing to do demonetisation, it’s to do with politics and a political change in atmosphere. When it comes to Kashmir, the terror there has increased, it hasn’t gone down. Secondly, you are saying,  that funding of the terror in Kashmir doesn’t happen through cash, it happens through electronic means. So demonetisation is the wrong way of tackling it. And thirdly, you are saying, these two statements made by the Home Ministry actually contradict what Arun Jaitley is saying. They don’t confirm it.

SY: Exactly.

KT: So the government is at odds with itself.

SY: It is. The government keeps producing these statistics in order to suit their own objectives at a point in time. And often they are contradictory to the actual reality and what they have themselves said in the past.

KT: In fact, the embarrassing thing is on the specific question of whether demonetisation has affected terror funding, what the Home Ministry is saying, and how you interpret what the Home Ministry is saying, actually contradicts Jaitley and doesn’t corroborate him.

SY: Exactly, I mean, it’s a direct contradiction with the Finance Minister’s statement.

KT: Let’s then come to what for many people, was the raison d’etre, the real reason for demonetisation.

SY: Black money.

KT: The belief that it will tackle black money. Now before I put to you what Arun Jaitley has written about that, let me ask you another question. Do you, as an independent observer believe that demonetisation has tackled black money? Has black money, has corruption, come down?

SY: No, on the contrary, it legitimised black money. The quantum of currency that has come back into the banks, the RBI itself says is close to 99%, which means almost all the cash that was outside. If you remember, the Attorney General of India told the Supreme Court that they were expecting 4-5 lakh crores of currency notes not to come back to the banks after demonetisation.

KT: Only 16,000 crore didn’t come back.

SY: Now again, if you look at today’s reports, the amount of money that is today with Nepal, in Bhutan, in Singapore, in Dubai…

KT: And cooperative banks which haven’t been counted either.

SY: Exactly, and if all this is counted, you may well have a situation where more money has come back into the banking system than what was demonetised.

KT: So before I quote what Jaitley has written, you are saying your personal assessment is that demonetisation has failed to tackle black money, it might have actually secured it or encouraged it.

SY: And legitimised it.

KT: And legitimised it.

SY: And secondly, please remember, this is very important to understand, the most liberal estimates of black money say that it’s not more than 6% in cash holding. Most black money is in gold or real estate. So tackling black money by demonetisation itself is limiting even if you accept the most liberal estimate of cash holding – up to 6%. So the actual big fish of your black money holders and operators (are untouched).

KT: So demonetisation as a way of tackling black money,  because black money is only 6% held in cash, is a bit like using a bomb to kill a mosquito.

SY: Yes, absolutely. Secondly, remember that black money is not a stock, it’s a flow. People who have black money make more black money by using it.

KT: Let me then, at this point, quote to you what Arun Jaitley in his blog has actually said specifically, about the success of demonetisation in tackling black money. He says, “Almost the entire cash holding of the economy now has an address, it’s no more anonymous.” Secondly he says, “The total amount of money which is under suspicion is actually something as large as 1.7 lakh crore. Separately the Prime Minister has said that 18 lakh accounts are under scrutiny and Arun Jaitley in his blog has added that 2.97 lakh companies are under scrutiny. Taken all together, this suggests that the quantum of money under scrutiny is very substantial. And secondly, a large number of entities who this money is supposedly with, are also under scrutiny. Doesn’t this suggest that when the scrutiny is done, not only will the black money be identified, it will then be taxed and the benefits to the exchequer could be substantial?

SY: The colour of black money is no different (from white money), how do you identify it? All the lakhs of people who stood in the queues converting old notes into new notes – for various other people and earning money for doing the job, their addresses may be there in the bank.

KT: In fact, if they were mules, they could be made to reveal whose money they were actually depositing. And then you’ll get to the address of the actual person, and you’ll identify the black money hoarder.

SY: It is so small (the amount) that each one was depositing, that you can’t even identify whether it is part of any black money.

KT: So you’re saying that the task is so difficult because there are so many mules to identify?

SY: Exactly, and please remember what Raghuram Rajan had said, he said the clever ones always find a way of bypassing all this. And demonetisation is not the way.

KT: But can I say, you’re not actually saying that the task the government has is impossible to do, you’re simply saying it’s difficult to do. Now, the answer to that was given to me by the NITI Aayog Vice Chairman, Rajeev Kumar. He said modern technology actually helps you make a task which looks and seems humongous, very simple. With modern technology, they can scrutinise 18 lakh accounts, they can scrutinise 2.97 lakh companies and they can ensure that this vast sum of 1.7 lakh crore, which is considered dubious, is identified as black and taxed.

SY: But listen, Karan, how was demonetisation put into practice? All this doesn’t work at all and is immaterial. It was cash to cash, you were depositing your money in cash or old notes, you were getting new money in new notes. Now if I were to do the change for you and give it back, for a cost of the commission, what is the bank going to track and how?

KT: But no, just a moment, you see it’s a simpler thing than that. People with black money, either themselves deposit it in banks or they use mules to do it. In either event, money that was unbanked became banked, the second it became banked, the government has it under its surveillance. Then the government has to admittedly investigate to discover whether it’s been taxed or not taxed. If it’s taxed, it’s white, if it’s not, it’s black. That, scrutiny, I admit will take time and it is difficult, but Rajeev Kumar says with modern technology it  can be done efficiently and effectively. It may take a year or two to do, but at the end of that, the benefit to the exchequer will be huge. That’s Jaitley’s point.

SY: By the end of it, your growth rate would have dropped below 5%, and then whatever benefit you are talking about, look at the job losses this is creating.

KT: So you’re saying it is not worth it.

SY: a) It’s not worth it and b) along with this move, the government did another thing, it increased the limit for buying gold from 50,000 to 2 lakhs. Now instead of depositing black money, someone could buy gold.

KT: So people have converted from cash to gold. In other words that was a mistake because it gave a let out to those with black money.

SY: The (black) cash which you’re saying is deposited in the banks, in fact was also used to buy gold.

KT: So you’re saying, even the prospects of this rather complicated and long procedure succeeding has been spoilt by the fact that the government gave permission to raise the gold holding from 50,000 to 2 lakhs.

SY: Without the Aadhaar conditionality, remember.

KT: And that was a let out given to people who have black money.

SY: Absolutely.

KT: You may be right on that, but let me put to you a point made by the Vice Chairman of the NITI Aayog, Rajeev Kumar. Sitting exactly where you are, exactly a week ago, he said that he was revealing something brand new which hadn’t been revealed before: 8.5 lakh account holders are now being processed because cases have been brought against them. And he made it clear that this is not the 18 lakh that the PM spoke about to whom questions are just generally being asked. These are 8.5 lakh against whom cases are being processed. Surely that suggests that modern technology and the surveillance of the government has actually taken them critically further down the road.

SY: No, (the goal) is way down. You see, they are processed, they are being scrutinised. What is the final result will all depend on the legal battle that will follow.

KT: Why are you doubtful the final result will be nill?

SY: Because of the reality that I see in front of me in this last one year.

Jobs have fallen officially, …this is not a job growth loss but job loss and your agriculture is in incomplete disarray. Your informal sector, MSMEs (micro, small and medium enterprises).. are completely shattered.

KT: I am not denying any of that, but how does that affect the government’s capacity to use modern technology to identify hoards of money in banks? The two are not related.

SY: For what purpose is black money identified?

KT: To tax it.

SY: For the benefit of the people, no? In the process, if you are going to ruin them totally, what is the benefit you are going to give them at the end of two years?

KT: I get the point you’re making, you’re saying that any benefit that you derive by taxing black money that you’ve identified will not be as great as the loss you have incurred because growth has gone down, jobs have gone down.

SY: And your industry is shattered..

KT: I take the point you’re making, but you’re not denying that the government may be able to successfully identify the money and tax it. You’re simply saying that the benefit is outweighed by the huge cost of job loss and growth loss.

SY: I am not denying that the government can process all this, but what I am questioning is whether there is going to be any substantial benefit out of this.

KT: Okay, let me put to you two benefits that Mr Jaitley has gone on to identify in his blog. The first is to do with the increase in the number of people paying income tax. Mr Jaitley says that it has gone up by 56 lakh, the year before it only went up by 22 lakh so the increase is over 150%. And The Indian Express separately, relying I presume on information that it’s verified, says that if you add to this figure those who paid tax but didn’t file returns, as well as those who filed returns but didn’t pay tax, actually the increase goes upto 1.26 crore. Now, that’s huge, Jaitley’s figure of 56 is big, but the Indian Express figure is huge.

SY: Even granting them these figures, one thing that neither of them is talking about is what is the quantum of tax.

KT: That is not so great, and that’s known.

SY: Exactly. So numbers (of tax payers) may increase–

KT: But surely the quantum of tax is not going to be frozen at this level forever. Once you’ve identified taxpayers, and these are people who will carry on earning, the tax they pay will grow. So it may not be big this year but it’ll be big in future.

SY: When in future? In the foreseeable future? In the long run we are all dead, remember.

KT: But why do we have to wait to die, this will be over in a year or two.

SY: No, it won’t. I’ll tell you, this year by the end of September, the gross tax collections of the government of India were only 40% of what was budgeted. We are now ending the year.

KT: That, of course, could also be because of GST, which is a further complicating factor.

SY: No, I am talking about the quantum of tax earnings. That is not going to increase. The numbers of tax payers increasing makes no sense.

KT: But, Mr Yechury, you are saying that even though you seem by implication to except that the number of taxpayers may have gone up 56 lakh as Arun Jaitley said or 1.26 crore as the Indian Express said, if the quantum of tax these people pay is not large, the increase in the numbers of people filing returns is irrelevant. But I say to you in return, the quantum may not be large this year, it could be large the next year or the year after that. Once they are on record as tax payers, one day the tax they pay will grow, hugely.

SY: You see tax quantum is directly related in proportion to the levels of economic activity. If the levels of economic activity fall, continue to fall in the next one year, two years, three years, then your return will be much less.

KT: I take your point, that the level of economic activity has fallen this year. So the fact that you have more tax payers in the books means nothing. Because the tax they are paying is zero. However, when the level of economic activity picks up, the fact that you have more tax payers on the books means you will be getting more tax. If it had picked up without the number of tax payers on the books increasing then you would have had a problem. That problem now has been taken care of.

SY: It all depends on the tax rates. As Gujarat elections are coming, you will see the tax rates..

KT: You are determined, one way or another, not to accept this as a benefit.

SY: No it is not.  I am convinced that this is not a substantial benefit.

KT: But surely it seems to me you are convinced out of a sense of not wanting to give the government credit, rather than because you have a good argument.

SY: No. I am telling you, the actual reason why the government did this, I am convinced now, and they’ve shifted the goal post, is to move India towards a digital economy.

KT: Well, I’ll come to that in a moments time. But there’s one more benefit, that Mr Jaitley has, because of what he calls, the tackling of black money. I am still talking about the black money objective. He says that, what he calls the acceleration in the financialisation of savings has speeded up hugely. And his figures are the following: corporate bonds have increased by 78,000 crores, money deposited in mutual funds has increased by 155%, premia paid for Life Insurance has gone up by 21%. All together, this means an increasing sum of money is being put legitimately into savings rather than kept in black. That again is another benefit.

SY: Can I, as an economist, give you an answer? That you can always increase your savings through forced savings. If the economic activity is low, people who have money, instead of investing, they will save.

KT: So this is forced saving?

SY: Forced saving. This is a reflection of the fall in your economic activity. A drastic fall.

KT: You would rather this money went into investment, rather than being forced into savings. In fact you are saying something as well, which is a little further to what you expressed. That the reason why people are putting larger and larger sums into mutual funds or corporate bonds or into Life Insurance premia is because they are scared to invest. And they are scared to invest because of what the government has done to the economy.

SY: And, they are scared to invest because there is no rise in domestic demand.

KT: So this is not a gain, you are interpreting this actually as a hit to the economy.

SY: Correct, it is a hit to the economy and that is reflected in your festive season. Look at the sales figures.

KT: Let’s then come at this point, to the fourth objective that the prime minister identified. Admittedly, it wasn’t identified in his speech on the 8th of November last year. He brought this up as an objective two weeks later: “To reduce the dependence of the economy on cash.” Now Mr Jaitley says, proof that this has happened is first, the cash to GDP ratio has fallen from 11.3 to 9.7. Secondly, he says that the reduction of cash in circulation is of the order of 3.89 lakh crore. And the Business Standard in a leader has said that in fact, there has been an increase of 41% in digital payments and digital transactions. All together, that does suggest that there has been a fairly significant shift away from cash to digital transactions.

SY: Again, lies, damned lies and statistics. The National Payments Corporation of India has put out these figures just a couple of days ago which say that between March 1917 and August 1917, digital transactions fell from from 149 lakh crores to 109 lakh crore.

KT: Can I interrupt you there? You’re not reading what the same corporation said about digital transactions, between November (2016), when there were 94 (lakh crore), and they went upto 149 (lakh crore) in March 2017. So they went up substantially, they have come down a bit, but they haven’t come down to 94.

SY: Number one, between 109 and 94, there is no substantial gain. Number two, they went up at that time because of a shortage of cash.

KT: Can I complicate it for you further? You are talking about a 109 in August, in September they went upto 124. We don’t have a figure for October as yet. I will, in fairness, say that it is believed that upto the 29th of October, the figure had come down to 97. But that is not an official figure, the only official figure is September at 124. So it’s yo-yo’ed, but it’s still up, 124 compared to 94.

SY: You see–

KT: That’s 30 lakh crore up.

SY: But listen, Mr Thapar, in an economy of this size and transaction of our GDP, which has now come down to over 20 lakh crores, you are talking of a pittance, a small bubble. This is not going to sustain, all this does is to give huge profits to your foreign, digital transaction companies.

KT: PayTM in particular, you have in mind. But let me put it like this, you are conceding that there has been some improvement in digital transactions, there has been some diminishment in the use of cash. What you’re saying is that it’s a pittance or a bauble, it doesn’t justify demonetisation.

SY: Number one, yes. Number 2 as I said, all this depends on various tax rates.  After GST coming, your digital transactions will take a much bigger hit, because of the GST on digital transactions.

KT: So this is not a continuing gain, it’s being compromised or countered by GST. So, just to sum up this part of the interview, we’ve talked about the four objectives the government had in mind when they rolled out demonetisation. And I’ll remind the audience, they were: tackling counterfeit currency, tackling terror funding, tackling black money, and finally reducing cash in the economy. And you’re saying, in terms of all four the gain has been less than substantial, and by no means have these four objectives therefore been effectively tackled.

SY: Absolutely, and in fact, the cost that we are all paying for it, is much much more than whatever gains that they are projected to get.

KT: Let’s come to that cost, because in a sense the opposition critique of demonetisation has not so far been in terms of failing to meet it’s objectives. The opposition critique is that actually, in the process of demonetisation, you have badly damaged the economy, in terms of growth, in terms of employment, in terms of investment, in terms of demand. Now, Mr Jaitley and the Prime Minister’s response is not to deny that there’s been adverse effect on the economy, but to say a) it’s short term and b) it’s reversed. And they insist that growth for the year as a whole, will still be somewhere around 7%, probably just above 7%. And the RBI has gone on record to say that for the last quarter of the year, it will be actually 7.5%. Maybe even, 7.9%. Now, how do you respond to that conviction, where they concede the hit is short term and temporary, but the economy will recover and growth in the last quarter will be 7.9.

SY: It’s very very unlikely (that the economy will recover in the last quarter), I just cannot see it happening. I’ll tell you why. First of all, you see, the Prime Minister has apart from the four objectives, talked about corruption.  Reducing dependence on cash will reduce corruption, according to their argument.

KT: That’s changing the chalta hai attitude, as Jaitley has said.

SY: No, that is wrong. Internationally, if you just look at it, the cash percentage of the economy is 3% in Japan, or in Brazil..

KT: You’re wrong, the cash percentage in Japan is 19.8%. Your best example is Nigeria, where the cash % is 1.55. Nigeria is considered one of the most corrupt countries in the world.

KT: But we wandered off to a different direction.

SY: No no, cash component in Japan is nearly 20%, and its 3% in Brazil

KT: It is one of the least corrupt countries in the world, and the opposite of Nigeria, where the cash component is 1.55.

SY: It is the opposite of India, of the Prime Minister’s argument that if you reduce the cash component in the economy, your corruption levels will fall!

KT: You have a very fair point, can I interrupt you, I’ll just explain it for the audience because they will be intrigued by the point you are making. You’re countering the government’s claim that as the cash to GDP ratio comes down, corruption disappears. And you have two counters to that – the first, is that Japan has a cash to GDP ratio of 19.4 or 5, it’s considered one of the least corrupt countries. Nigeria has a cash to GDP ratio of 1.55, it’s considered one of the most corrupt countries. Both these examples counter the government’s position that the lower the cash to GDP, the less corrupt the economy. But leave that aside, let’s come back to my point, which is that you believe, the damage to the economy, in terms of employment, in terms of demand, in terms of jobs, in terms of growth, has been severe. The government concedes there’s been an adverse impact. Their point is, it’s temporary, it’ll be reversed, they believe that the economy for the year as a whole will grow at around 7. The RBI says that for the last quarter it will grow at 7.9. How do you respond to that?

SY: You see, the RBI’s growth for the last quarter again is misleading. Because the base is very very low, economists and statisticians will tell you. For the last 6 quarters, your economy has been on the decline.

KT: But that criticism can always be made when you grow well from a low base.

SY: From a low base your growth rate will always be high.

KT: But that isn’t a substantive criticism.

SY: No no, it is substantive in the sense that you are not recognizing the hit that you’ve taken in the last eight, and specifically the last six quarters.

KT: But, Mr Yechury, when you start improving, after having been on a downward trend, this criticism will always be made. It is not a substantive criticism.

SY: The same RBI, last week when it put out it’s estimates, says 6.7% is the growth they are estimating.

KT: Let me understand this, are you simply questioning the claim that the growth rate will be 7.9 on the grounds that the base is so low, the growth will always look big. Or are you actually saying the government is wrong when it says the hit will be temporary and reversed? Which of the two?

SY: I am saying the government is wrong when it says that it’s temporary and it’ll reverse very soon. It cannot, because of the fundamentals of the economy. You see one fundamental factor, you must get this statistic. What is the gross capital formation in the economy?

KT: It’s down to about 30% at the moment. But it’s been declining for a while, it’s not that the Modi government has pushed it down, it was coming down under Mr Manmohan Singh as well.

SY: Again, it’s not a tu-tu main main, the point is, if you want an economy to have a sustainable growth trajectory, you have to do capital formation. This is one of the important materials (in the economy).

KT: And that, as you explained a moment ago has been damaged and the pride that Mr Jaitley takes in what he calls the accelerated financialisation of savings, actually means, money is not going into investment, gross fixed capital is not happening, because money is going somewhere else. I accepted that point, although, I imagine, economists will dispute it because economists will say when money goes increasingly into bonds and mutual funds, it is actually going to go into investment thereafter. You’re questioning that.

SY: I am questioning that, because, you see the general rise in prices now? You see the fuel prices?

KT: My last question to you, and it’s to do with this: Mr Jaitley says that demonetisation has effectively brought into being three critical structural reforms: One, he says, the reduction of cash in the economy, number two, the increase in taxpayers and number three the fact that the economy today is far cleaner and more transparent  and he says these three structural reforms ensure that hereafter, the economy is poised for long term 8% growth.

SY: It is cosmetic, there’s nothing, fundamental, substantial, within the body. You can put on all sorts of perfumes of Arabia, remember Shakespeare, but it cannot take away the (stink). How many people died in the lines in demonetisation, how many lives were lost, how many lives have been ruined?

KT: You are back to once again saying it has worsened. Leave that argument aside.

SY: No, what is being claimed by the finance minister is just cosmetic.

KT: You mean these are not real structural reforms?

SY: No, they cannot lead to structural reforms, unless they propel some economic activity.

KT: So you do not believe the claim, that as a result of demonetisation, the economy is positioned and poised for long term growth of 8%.

SY: No, on the contrary, I think it will take us a generation to get back to normalcy, after the damage that has been done.

KT: So my last question. You do, therefore, take the position that demonetisation both in terms of its impact on the culture of corruption, as well as in terms of acheiving it’s four objectives, is a failure?

SY: Absolutely, and in fact what could be done is–

KT: There is no small, slight, glimmer of success? Not even a slender bit of success?

SY: It depends from which side you are looking at it. There is a slight sliver of success, that is the corruption rate has gone up from the old 1000 rupees note to the 2000 rupees note. So the (corrupt) have gained.

KT: Perverse success, corruption has gone up? But no benefit at all?

SY: None at all.

KT: Sitaram Yechury, a pleasure talking to you.

SY: Thank you.

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