Former Prime Minister Manmohan Singh, a globally respected economist, has called the demonetisation drive a case of "organised loot and legalised plunder", warning that it will drag India's GDP by 2 percentage points.
The scathing criticism from the Congress leader, who opened up India’s economy in 1991, invited a rebuke from Finance Minister Arun Jaitley who alleged that most black money was accumulated in India from 2004-14 when Manmohan Singh headed a coalition government.
The former Prime Minister, a front bencher in the Rajya Sabha, made a rare speech in the House to talk on the government’s move of spiking 500 and 1,000 rupee notes and how it was going to impact India’s economy.
“The national income, that is the GDP of the country, can decline by about 2 percentage points as a result of what has been done. This is an underestimate, not an overestimate,” said the Oxford- and Cambridge-educated economist.
“What has been done can also weaken and erode our people’s confidence in the currency system and in the banking system.
“It is no good that every day the banking system comes up with new rules. It reflects very poorly on the Prime Minister’s Office, the Finance Minister’s Office and the Reserve Bank of India,” said the economist who has also served as an RBI Governor.
As the man of few words spoke for about seven minutes, a hushed Rajya Sabha listened quietly with Prime Minister Narendra Modi and Jaitley also present. There were loud cheers from the Opposition benches and some from the treasury nodded their heads.
“In the process of demonetisation, monumental mismanagement has been undertaken about which there are no two opinions in country as a whole,” he said.
“It is a case of organised loot and legalised plunder. It is not my intention to pick holes. I sincerely hope the Prime Minister, even at this late hour, will find a solution.”
Manmohan Singh’s worries come against the backdrop of a host of economists, experts and think tanks revising downward their growth outlook for India, with the most pessimistic forecast being a mere 0.5 per cent growth by Ambit Capital for the six-month period ending March 31, 2017.
The Indian economy had expanded by 7.2 percent during the third quarter ended December 31 of last fiscal year and by 7.6 per cent for the year as a whole.
The former Prime Minister wondered if the government was aware of the extent of hardship that demonetisation had caused to small businesses, the common man and the rural economy.
He reminded the government that 90 per cent of the work force was in the informal sector and 55 per cent of those in the agriculture sector were in distress now.
“The cooperative banking sector, which is serving a large number of people in the rural sector, is not operational. The way in which demonetisation has been implemented will hurt agriculture and small industries.”
He also quoted John Maynard Keynes to counter Modi’s appeal to the people to bear with him for 50 days. “Those who say demonetisation is good in long run should recall the quote: ‘In the long run we are all dead’.”
The government returned the criticism and targeted Manmohan Singh and his tenure as the head of a multi-party government led by the Congress.
“It is disappointing to hear from people who were in charge of the government when the most black money was generated, most corruption scandals came to the fore,” Jaitley said, referring to the financial scams that emerged during Manmohan Singh’s rule.
“I would like to know from the Prime Minister the names of any country he may think of where people have deposited their money in their banks, but they are not allowed to withdraw,” Manmohan Singh queried during his statement in the upper house of Parliament.
He also hoped the government will help find practical ways to give relief to people who are suffering, since 60-65 people had already lost their lives due to the move.
Manmohan Singh said the areas and sectors that have suffered the most are small businesses, farming and cooperative banking, and made an ardent appeal to the government to take note of the grievances of the people.
Defending the demonetisation decision as “correct”, Union Finance Minister Arun Jaitley said, “The steps this government has taken are right and are being implemented in the right manner.”
Lashing out at the Congress, Jaitley said: “We are not surprised when we hear from those who ran the government between 2004 and 2014 that they do not like these steps against black money.”
“The maximum black money was generated in this country between 2004 and 2014. The biggest corruption scandals pertaining to the Commonwealth Games, the 2G spectrum and the coal blocks took place during this period,” he added.
Jaitley said people who did not consider these scandals to be blunders were now considering the campaign against black money and corruption to be a blunder.
“This is the exact rational argument that they will put forward in the debate in Parliament as it takes place. But it’s obvious that the opposition is uncomfortable with the debate and are inventing …a … manufacturing reason to run away from the debate,” the minister said.
The Rajya Sabha on Thursday resumed discussion on the government’s demonetisation move after facing repeated adjournments for the past five days.
However, the opposition again forced adjournment of the house in the post-lunch session over its demand for the presence of Prime Minister Narendra Modi during the debate.
The Trinamool Congress in the Rajya Sabha flayed Prime Minister Narendra Modi for criticising those opposing the demonetisation move and asserted the government cannot suppress the voices of the people.
Leading the party’s charge against demonetisation in the house, Trinamool Congress leader Derek O’Brien said: “Anyone who opposes your policy, Mr. Prime Minister, is not anti-national or in favour of black money. Why are you giving us this lecture on corruption and black money?”
“We are opposing you because we believe this will kill the economy. Why do you think that you are some messiah and all of us are demons? Why are you making this an issue?” he added.
Pointing to the opposition parties closing ranks and mounting a united fight against demonetisation, O’Brien said: “All opposition parties are together, it is no more a solo voice. It’s a chorus of the people. You cannot suppress the voice of the people.”
Charging the government with using central probe agencies to intimidate the opposition, O’Brien even dared Modi to put Trinmaool supremo and West Bengal Chief Minister Mamata Banerjee in jail.
“Try, as you may, through your agencies to hassle and harass us. That will give us more conviction to fight against you. Put Mamata Di in jail if you want,” he said.
Several of Trinamool high-profile leaders, including some members of parliament, have been arrested and interrogated by the Central Bureau of Investigation and the Enforcement Directorate in connection with the Saradha Group chit-fund scam in West Bengal.
Mamata Banerjee and her Trinamool Congress have since been up in arms against the Modi government, accusing it of politically using the CBI and the ED.
O’Brien’s charges in the house came on a day when Banerjee, for the second time in a week, personally raised the demonetisation issue with President Pranab Mukherjee when she called on him. (IANS)