New Delhi, Nov.24 (Agencies): Former Prime Minister Manmohan Singh on Thursday castigated the government and Prime Minister Narendra Modi in the Rajya Sabha over the way demonetisation has been implemented, and said the disruption would hurt the economy.
”My own feeling is that the national income, that is the GDP of the country, can decline by about two percentage points as a result of what has been done. This is an under-estimate and not an over-estimate,” Singh told the House as Modi, present briefly in the after noon session, listened.
After Modi’s surprise November 8 announcement cancelling all 1000- and 500-rupee notes, accounting for 86 per cent of the currency in circulation, the cash-based economy has been thrown into turmoil, hitting farmers, traders and workers in the unorganised sector the most after the government admitted that not enough notes had been printed to replace the old currency, and that cash dispensing machines were not ready to accept the first 2000-rupee notes.
Singh termed the post-demonetisation chaos a “monumental management failure” and a case of “organised loot and legalised plunder.”
Singh, an economist by training who was a governor of the Reserve Bank of India and later the finance minister who reformed the economy in the Nineties, said he hoped Modi would find a practical, pragmatic ways to help the 90 per cent of the population that exists in the informal sector.
Agriculture, unorganised sectors and small industry have also been hit hard by the disruption, and people were losing faith in the currency and banking system, Singh said.
He said the cooperative banking system, which serves large numbers of people in the rural areas, is non-functional, has been prevented from handling them.
“All these measures convinced me that the way the scheme has been implemented, it's a monumental management failure. And in fact, it is a case of organised loot and legalised plunder,” he said.
Earlier, Leader of the Opposition Ghulam Nabi Azad had requested Chairman Hamid Ansari and Leader of the House Arun Jaitley, the finance minister, that the Question Hour should not be taken up as the Prime Minister was present in the House and the debate be taken up.
The government accepted Azad's request readily, with Jaitley saying that the debate should start immediately and Modi will certainly participate in it.
Participating in the resumed debate, Singh said it is important to take note of the grievances of the ordinary people who have suffered as a result of this imposition on the country “overnight” by the Prime Minister.
Modi, in the chaotic days following demonetisation, had urged the people to wait for 50 days, pointing out that his attack on black money and corruption would be good for the country in the long run.
Singh, pointing out that 50 days may be too long a wait for the poor, quoted the economist John Maynard Keynes: “In the long run, we are all dead.”
”Well 50 days is a short period, but for those who are poor and deprived sections of the community even 50 days of torture can bring about disastrous effect. And that's why about 60 to 65 people have lost their lives. Maybe more.”
The government, to tackle what it claims is a shortage of new currency notes, has set daily and weekly limits on how much of their own money people can draw from their own bank accounts.
Singh said he would like Modi to name the countries where people deposit their money in banks but are not allowed to withdraw it.
“This alone I think is enough to condemn what has been done in the name of greater growth,” Singh said.
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