The Harvard Business Review (HBR) on Friday reiterated that the demonetisation policy “was poorly thought out and executed and that its net impact would be negative and particularly bad for the poor.” A write-up by Bhaskar Chakravorti, titled “One Year After India Killed Off Cash, Here’s What Other Countries Should Learn from”, lists out at least four lessons that the world can learn from India’s cash ban.
In the first lesson, “*Choose Your Experts Carefully*“, Bhaskar said that every economic policy needs to be guided by experts in economics, business, technology and those in policy execution. However, he added, that in the case of India, it is “unclear” if any experts were consulted.
Secondly, Bhaskar said that *basic data shouldn’t be ignored* and that a policy needs to implemented following a fact-based cost-benefit analysis, taking into account basic data. The Indian government ought to have weighed several factors before taking the decision.
Through the third lesson, “*Consider Human Behavior*“, the article said it is important to look at how the policy is expected to translate into impact. This “translation mechanism” is based on people’s response to change in their environment.
The fourth lesson, “*Beware of Digital Silver Bullets*“, acknowledged that it is “tempting” for policy makers to advocate technology and the “digital uptake”. When the narrative of black money failed, the Modi administration promoted the idea that demonetisation would help India become a cashless economy.