Former World Bank Chief Economist Kaushik Basu said the Modi government's decision to demonetise high denomination currency notes is not 'good economics' and the collateral damage of demonetisation is likely to far outstrip the benefits.

"GST was good economics; the demonetization is not. Its economics is complex and the collateral damage is likely to far outstrip the benefits," Basu, who was also Chief Economic Advisor in the Ministry of Finance, said in a tweet.

Basu is currently professor of Economics and C Marks Professor at Cornell University.

Basu on November 8 had said that with demonetisation, it is very likely that there will be a spike in gold and silver prices in India.

In its biggest crackdown ever on black money, the government on Tuesday night announced demonetisation of ₹ 500 and ₹ 1,000 bank notes and asked people holding them to deposit into bank accounts.

Since yesterday, people have been thronging banks amid concerns over exchanging and depositing the scrapped currencies.

People can deposit old ₹ 500 and ₹ 1,000 notes in their accounts till December 30, 2016, without any limit.

Rstrictions have also been imposed on withdrawal limit and people can withdraw up to ₹ 10,000 per day or ₹ 20,000 per week. This limit will be reviewed after few days.

Finance Minister Arun Jaitley yesterday had said the Centre is making all efforts to build consensus on sticky issues, especially on jurisdiction of assessees, to ensure GST roll out from April 1, 2017.

As per the GST Constitution Amendment Bill, which was notified on September 17, 2016, the government is required to complete the process of implementation of GST within a year.

Demonetisation economics criticised as harmful while GST is described as sound reform; cash deposit and withdrawal limits imposed. The article contrasts GST as sound economic reform with demonetisation viewed as economically problematic, warning its collateral damage may exceed benefits; it summarises government measures withdrawing specified high-denomination notes, requiring deposits within a prescribed timeframe, imposing temporary cash withdrawal limits, and noting efforts to finalise GST implementation and jurisdictional arrangements for roll-out.