Demonetization impact would be positive if there were no Rs 2,000 notes: Uday Kotak

Expressing his views over the demonetization drive in 2016 by Modi government, Uday Kotak said that the demonetization could have had a positive impact on the Indian economy if simple things like introducing Rs 2000 notes were avoided. 

Uday Kotak said, “I think we would have had significantly better outcomes, if we had just thought about simple things. If you are taking out Rs 500 and Rs 1,000 notes, why would you introduce Rs 2,000 notes?”. 

He, however, has also claimed that for the financial sector, demonetisation was a boon. 

The managing director of Kotak Mahindra Bank was speaking at the book launch of former chief economic advisor Arvind Subramanian. 

Earlier, Arvind Subramanian on Saturday targeted the Modi government over its attempt to pressurize RBI into sharing its surplus. Subramanian in an interview to a TV channel said, "It (surplus funds) should not go towards routine financing of spending and deficit financing - that would amount to raiding the RBI."

Subramanian's comments came after a reported tussle erupted between the Centre and the Reserve Bank of India (RBI). 

"RBI is one of India's most respected organisations... But I think the part of the problem has risen because the RBI has not been open to discussing it as a technical issue," he said to the TV channel. 
 
"(Excess reserves) should be deployed but only for recapitalising for banks and only if that recapitalisation is done along with reforms of the banks," the former CEA added.

The noted economist also shared his views over ongoing IL&FS crisis. 

Arvind Subramanian called for an asset quality review (AQR) like the one carried out on the banks by the central bank, to fully gauge the extent of the hidden stress in the system. Stressing on the need for the Reserve Bank to function in an autonomous way, he also hit out at the recent "politicisation" of the issue, saying it is detrimental to the country's interests.

"I am proposing an AQR for non-bank lenders as well, as I think it's time we come clean on this problem," Subramanian said at the launch of his book 'Of Counsel: The Challenges of the Modi-Jailtely Economy' published by Penguin Random House India.