Demonetisation has hit the nation’s poor the hardest, former Reserve Bank of India governor Raghuram Rajan told The Times of India on Sunday. Demonetisation cannot be described as an economic success at this point, Rajan said but added that an assessment at a later stage would give a clearer picture.

The cost of Prime Minister Narendra Modi’s crackdown against black money has caused the Gross Domestic Product to suffer, the economist said and added that a skewed measurement of the GDP will overlook the impact of demonetisation on the poor.

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“It is probably fair to say that demonetisation has had the largest impact on the people who transact informally, of which many might be very poor,” he said. “...As the economy gets remonetised, hopefully some of them will bounce back but there are also people with very thin buffers. Some informal firms may have closed down because of the kind of stress they experienced and we will have to, over time, see how we can measure and get a full understanding of the impact of demonetisation.”

Rajan maintained that the intent of the exercise was good. “I think the view of any monetary economist would be that you first print the money and then do the demonetisation, and I do not know what the rationale for doing it when it was done is,” Rajan told the newspaper.

He added that he was not party to the Bharatiya Janata Party-led Union government’s controversial decision.

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Rajan’s book I Do What I Do: On Reform, Rhetoric & Resolve, will be available at bookstores from September 4, HarperCollins has said. His book comes out a year after his return to academia.

The Centre scrapped Rs 500 and Rs 1,000 notes on November 8, claiming that this would eradicate black money, fake currency and corruption. As the bills went out of circulation, the RBI issued Rs 2,000 notes and a new series of Rs 500 notes. Currently, these two high-denomination currency make up for more than 70% of all currency in circulation by value, according to RBI data.