Manmohan Singh on demonetisation: ‘Economic misadventures can roil the nation for a long time’
On the second anniversary of the note ban, the Congress called for an investigation into the exercise even as the BJP hailed it as a success.
Former Prime Minister Manmohan Singh on Thursday said that November 8 – the day India demonetised high-value currency notes in 2016 – is a day to remember how “economic misadventures can roil the nation for a long time”. The Congress leader urged the government not to resort to any more “unorthodox, short-term” economic measures that could lead to uncertainty in the economy and financial markets.
On November 8, 2016, the Centre demonetised notes of Rs 500 and Rs 1,000, claiming that it would end the flow of black money, among other things. The government gave citizens time to exchange these notes with new ones, and it was believed that a significant amount held as unaccounted-for money would not return to the system. However, in August 2018, the Reserve Bank of India said over 99.3% of the banned banknotes in circulation before the decision had been returned to banks.
Last year, the ruling Bharatiya Janata Party had decided to mark the first anniversary of demonetisation as “Anti-Black Money Day”, but there is no such celebration this time. On its Twitter handle, the party has claimed that demonetisation led to an increase in tax compliance and prompted action against corruption and black money. The Congress, like last year, is expected to mark the anniversary as a “Black Day”, reported ANI.
The Congress said the exercise curbed neither black money nor terrorism funding or fake currency, and sought an apology from the prime minister for the “Modi-made disaster”. Congress spokesperson Randeep Singh Surjewala called for an investigation into the move.
Calling the decision “ill-fated and ill-thought”, Manmohan Singh said November 8 was when Indians need to remember that “economic policymaking should be handled with thought and care”. He pointed out that there was a steep drop in economic growth after demonetisatio. As such, small businesses are yet to recover, employment has suffered, and financial markets have been volatile.
Former Finance Minister P Chidambaram called demonetisation an “ingeniously designed official money laundering scheme”, Firstpost reported. Reacting to Finance Minister Arun Jaitley’s defence that confiscating currency was not an objective of demonetisation, Chidambaram said, “Will someone please remind him of what he told the media and what the AG [Attorney General] told the Supreme Court?”
“The dream was to gain Rs 3 lakh to Rs 4 lakh crore,” Chidambaram said. “Thanks to rampant money laundering at bank counters, that dream turned into a pipe dream.”
West Bengal Chief Minister Mamata Banerjee said demonetisation was a “disaster” for the country, and described it as a “dark day”. “Renowned economists, common people and all experts now agree,” she said.
Delhi Chief Minister Arvind Kejriwal described the move as “a self-inflicted deep wound on the economy”. “Though the list of financial scams of Modi government is endless, demonetisation was a self-inflicted deep wound on Indian economy which even two years later remains a mystery... why the country was pushed into such a disaster?” he questioned on Twitter.
Congress MP Anand Sharma called the move “an unforgivable and autocratic decision” and alleged that it wiped out almost 2% of the country’s GDP. “On this day two years ago, the Prime Minister had taken a wrong and insensitive decision,” he said. “Whatever happened in the country after that, the onus of all of that falls directly on the Prime Minister.”
Senior Congress leader Ashok Chavan said demonetisation was the “biggest mistake of the Modi government” and claimed it resulted in the slowdown of the economy and an increase in unemployment, PTI reported. “Not all cash is black and not all black [money] is cash,” he said. “Ours is a cash economy and receipts are not available for all transactions.”
The Maharashtra Pradesh Congress Committee chief also asked if the Union cabinet, the chief economic adviser and the cabinet sub-committee were even aware that such a move was in the pipeline.