Thread by @GorwayGlobal

1/ This is voodoo economics. Lets start with high real estate prices being a problem. Are there not other ways of dealing with an asset price bubble here?Rraising Stamp Duty, a national register of real estate, gradually escalating property tax, are some measures...

2/ The trouble is that these steps call for better honest administration that is non-corruptible and fair. But that remains elusive in India. The fact is that while property prices may have come down, the venality has not. There's still a lot of under-the-table deals.

3/ with all the cash sloshing around Indian money has now become the largest source of deals for real estate in Dubai. So the rich guys have found a new place to park their wealth. Thank you for #DeMonetisation.

4/ Next the comparison between high value notes being used to pay inflated prices for real estate and the 2007 US sub-prime problem is laughable. If anything the fact that the loan to value ratio is v low in India saved us from the worst of the sub-prime type crisis.

5/ Next #DeMon led to savings growth. a) that's not true, it merely forced savings people had for a rainy day to move into bank accounts; b) the banks are unable to use those savings productively because they were awash with funds they couldn't lend anyway due to NPAs and

6/ lack of suitable projects. If India had so much money to invest why is FDI inflows growing? because they are buying up distressed assets! half of all FDI are ending up here and not in new manufacturing investment opportunities. In any case the idea that people who save cash

7/ done know how best to invest their money is ludicrous. #DeMon led to a drying up of the complex system of agricultural credit that kept the rural economy going. Poor Indians are among the best risk managers. MUDRA can never replicate this complex eco-system and as a result..

8/ the rural economy is in the doldrums. Next @sgurumurthy mentions shell companies and their illegal transactions. But what has that got to do with #DeMon. Everyone knew about shell companies and money laundering. It calls for a big investment in investigative capacity..

9/ and a criminal justice system that works. The snag is that most of these shell companies are in hock to the politicians who rule the country and therefore despite all the talk nothing will happen because its too close to the most powerful in the land. But the point is this:

10/ All this action on corruption, shell Cos and hawala transactions could have been taken without #demonetisation. ! Indeed #DeMon makes it no easier to deal with this issue. All it has done is disrupt the lawful economic activities of millions upon millions of honest citizens.

11/ And lastly there is a factual untruth in the piece by @Sgurumurthy. He claims that digital payments have grown by 93% between Jan and June 2017 (expected growth 21%) I am not sure what he is counting as digital payments, but if you look at the RBI data...

12/ on digital transactions month by month till Aug 2017, its hard to see any effect of #DeMon on total value of such transactions except in a)value of pre-payment instruments like PayTm (from a v low base) and b)No of POS terminals. This may be hard to believe but see my charts:

13/ I analysed @RBI 's long running time seriues data set on digital transactions and charted them to look for an effect here: twitter.com/i/moments/9228…

14/ Finally, @sgurumurthy points to a growth in manufacturing quoting IIP data but h makes the classic mistake to choosing 2 time points to compare. here's the trend and it tells a different story altogether.

's piece in @the_hindu is an example of post-hoc rationalisation of a badly conceived failed policy implemented w/o considering unintended consequences and w/o asking for expert advice. One year on the benefits are hard to see, the harms are obvious to millions.