Cash-to-GDP ratio must be halved in 3 years: Ex-Revenue Secretary
Chennai, Dec 28 (IANS) The Centre should work towards bringing down the cash-to-gross domestic product (GDP) ratio to around 7 per cent from the current 13 per cent in three years, a retired top bureaucrat has said.
Former Revenue Secretary M.R. Sivaraman also said the central government should make it clear that the new 500- and 2,000-rupee notes would be withdrawn over a period of time.
“The cash-to-GDP ratio of 13 per cent is certainly not right. All these years nobody said anything against the RBI on the cash economy in the country,” Sivaraman, who is former Executive Director of the IMF, told IANS.
Agreeing that there has been a failure in the smooth implementation of the demonetisation of 500/1,000-rupee notes, Sivaraman said at least now the Centre should take some proactive and open steps and take state governments into confidence.
“The central government should make it abundantly clear that it is for reducing the cash:GDP percentage to seven per cent in three years. The Centre should also write to the states on the issue,” Sivaraman said.
According to him, all payments by and to the central government should be by way of cheque or other means and not by cash. Similarly all public sector undertakings should go cashless.
“Supply of cash to rural areas should be increased while cash supply in urban areas should be contracted. People in urban areas have alternate modes for financial transactions like credit/debit cards, mobile payments and others,” Sivaraman said.
“The government should tell people that it is working towards the cash:GDP of seven per cent in three year time frame. The people should also be informed that the new 500- and 2,000-rupee notes would be withdrawn and only 100-rupee note and other lower denomination would exist,” Sivaraman said.
According to him, the plan of action should be made known to the public.