GDP will take 2% hit thanks to demonetization: Manmohan Singh

India's Gross Domestic Product (GDP) will take a 2% or a 200 basis points (bps) hit thanks to the roll out of demonetization, former Prime Minister Manmohan Singh said in the Rajya Sabha on Thursday.

Singh was speaking during the demonetization debate in the Upper House in the presence of Prime Minister Narendra Modi. 

Calling the entire currency decommissioning process a "monumental management failure", Singh said, "We don't disagree with the objective of the fighting graft." The Rs 500 and Rs 1,000 notes were rendered illegal from November 9, in a bid to clampdown on black money in the economy and to fight terror funding which is usually carried out in high denomination banknotes, the government said. 

The former PM urged the ruling government to take note of the grievances of the people who are suffering, and asked them to come up with a practical solution for the implementation of the scheme. 

In the chaos that has followed the demonetization move, businesses and the unorganized sector which function primarily on cash, have taken a hit. The stocks of FMCG companies, real estate firms, have on a sinking spree. The former because of limited liquidity with the people to buy essential commodities, and the latter, because the sector is infamous for parking black money. The benchmark BSE Sensex and National Stock Exchange Nifty have also been seeing a weak trend since the announcement, also dragged down by overseas cues like Republican Donald Trump's surprise election win.