Note ban will lead to temporary slowdown, says Prez Pranab Mukherjee 

President Pranab Mukherjee on Thursday issued a note of caution that the Narendra Modi government's demonetisation decision could likely lead to a temporary slowdown in the economy and hurt the poor.

The President called for policymaking that would reduce the suffering of the poor, and seemed to question the focus shift in the government's poverty alleviation programmes and policies from an entitlement-based approach to an entrepreneurial one. Mukherjee said he was "not too sure the poor could wait that long" to endure the gestation involved in the transition.

In his New Year's address to Governors and Lieutenant Governors, the President termed 2016 as a year of "mixed fortunes", which began on a positive note, with the economy looking up, but ended with exports having slowed down because of global cues. He said the losses could be recovered by improving the competitiveness of domestic industry.
The President also called upon the Governors to use their good offices to play the role of unifiers, with elections to seven states to be held this year. These elections could deepen the fault-lines in the society. He said India's strength lay in its diversity. "There will always be divergent strands in public discourse. We may argue. We may disagree. But we cannot deny the prevalence of multiplicity of opinion," Mukherjee said.

But the President's views on the Modi government's currency swap decision and his veiled criticism of doing away with the entitlement-based approach, of which he was a key part when initiated by the Congress-led UPA governments, merit attention.

"Demonetisation, while immobilising black money and fighting corruption, may lead to a temporary slowdown in the economy. We all will have to be extra careful to alleviate the suffering of the poor which might become unavoidable for the expected progress in the long term," Mukherjee said.

"While I appreciate the thrust on transition from entitlement approach to an entrepreneurial one for poverty alleviation, I am not too sure that the poor can wait that long. They need to get succour here and now" to have a future devoid of hunger, unemployment and exploitation, the President said. Mukherjee said the recent package announced by the PM will provide some relief.

On the year gone by, the President said 2016 began on a very promising note, with the economy performing well, overcoming the weak global economic trends. He said: "GDP growth of 7.2 per cent in the first half of 2016-17, the same as that of last year, is a pointer to the fact that our economic recovery has been on solid grounds."

He said that below-normal monsoon in 2014 and 2015 had caused rural distress, and a good monsoon in 2016 was expected to improve agricultural production and increase rural employment and incomes. "Though our exports have been affected by a weak global demand, we have a stable external sector. Reviving exports will remain a challenge but we can overcome it by improving the competitiveness of the domestic industry," he said.
Mukherjee also spoke about the forthcoming Assembly elections. This year, elections are due in seven states. First in Uttar Pradesh, Uttarakhand, Manipur, Punjab and Goa, and by the end of the year in Gujarat and Himachal Pradesh. He said elections could deepen the fault-lines in the society, and Governors could play an important role in easing the tensions in the society.

"Goodwill must prevail between different communities. At times, harmony may be put to test by vested interests. Communal tensions may rear their ugly head. Rule of law must form the sole basis of dealing with any such challenging situation," the President said.

The President said "tolerance, respect for contrary views and patience are a must" in a pluralistic democracy like India's. He quoted first prime minister Jawaharlal Nehru that India "is a country held together by strong but invisible threads." Mukherjee said India's strength lies in its diversity.

"There will always be divergent strands in public discourse. We may argue. We may disagree. But we cannot deny the prevalence of multiplicity of opinion," he said, asking the Governors to inculcate amongst the citizens of your state "this fundamental ethos of our civilisation."