Sycophancy of economists supporting demonetisation

Jagdish Bhagwati and Arvind Pangariya in their book “Why Growth matters?” deliberately misinterpreted certain data to force fit into their narrative. They oversold the Gujarat growth story for which there’s no evidence as pointed by Maitreesh Ghatak. They deliberately misinterpreted data to show Kerala’s education in poor light while exaggerating Gujarat, which I had blogged about earlier.

Bhagwati is now supporting demonetisation based on ridiculous arguments for an economist of his stature. In his TV interview with Barkha Dutt, he says that demonetisation is advantageous to poor people and will have inflationary effect because rich will now use the poor to launder money (by making them stand in queues etc.). He calls it a redistribution programme and has no concerns about it.

One, supporting demonetisation because it provides employment through new economy of laundering is ridiculous to say the least. It doesn’t consider the costs. The worst sufferers are the poor.

Two, an economist who is ideologically against higher taxes, supports the policy because it taxes the rich.

In his article, he makes a ridiculous (again) metric for measuring consent. He says that people are supporting demonetisation as evidenced by the lack of riots.

Finally, not to mention the deflationary effect of demonetization that we all witnessed. Despite this evidence, Bhagwati claims this to be inflationary.

One would understand if this is coming from someone who doesn’t grasp economics. If it’s coming from a renowned professor, it’s nothing but deliberate. It’s sycophancy in the mildest of the terms.


In 2010, while commenting on the economic impacts of bandh, Bibek Debroy argued

In urban India, unskilled daily wage earners are at the lowest end of the spectrum. Bandhs aren’t distributionally neutral. A Rs 140 crore shock to them is difficult to absorb. A Rs 3,000 crore shock to the rest of the economy (assuming that figure was true) is easier to absorb.

Debroy, who once argued that a 140 crore shock to unskilled workers due to a single day disruption is difficult to absorb, is now supporting a policy that’s resulting in protracted disruption.

Nothing other than sycophancy explains this.

In his article, he questions Manmohan Singh, resorting to whataboutery “Why did Congress government demonetize 1000 rupee notes in 1980s?” He questions “if it’s logical then, it’s logical now”. It conveniently glosses over the real value of 1000 rupee notes then and now. They were 1% of cash then and now 86% of cash. It’s not that Mr. Debroy doesn’t know this. It’s a deliberate attempt to mislead people and give fodder to the supporters.

As a further evidence, Debroy makes up school debatish arguments in his interview with Karan Thapar. He goes on to say that 2000 rupee notes are printed because it’s easy to count at the bank counters.


After initial years of the current government, there was a dissatisfaction of the lack of reforms. Vivek Deheija then argued that incrementalism is the best citing his Ph.D work and that big bang isn’t preferable. Now, he is turning the plate and supporting what he himself calls big bang reform. Of course, this is apart from the fact that people meant big bang in terms of a large number of tough political economy decisions, not a big bang in terms of making people suffer. If big bang is meant to be measured in terms of suffering, may be a nuclear bombing should be advocated. It gives the biggest bang.


It’s a good example of how experts exploit the grey areas and provide fodder to the political class, trying to change the narrative. It’s an example of misusing the rational calculus without ethical concerns. It’s an example of lack of empathy for people’s suffering. They are basically ready to do and support anything to justify government’s actions.

Srinath Raghavan rightly takes all these guys to cleaners in his mint article.