It was a historic speech of former Prime Minister Manmohan Singh on the floor of Parliament in which he found fault with the Modi government for demonetization of high value notes of Rs 1000 and Rs 500 from November 8 last year and said it was a ‘monumental mismanagement’. The government in its reply said that Manmohan Singh’s economic calculation was wrong and he ignored ground reality that forced the government to take the decision to unearth black money, to curb counterfeit currency and to narrow down the monetary flow to the terrorists. Many other leading economists criticized the unwise and uncalculated decision, but the government had the stock reply with the trio-object. Then the opposition wanted to know the value of the scrapped notes that were deposited in the banks. The government had no answer as the Reserve Bank of India took its own time for the counting process. Now the figures are out and it is known that almost all the junked notes were deposited i.e. more than 99 per cent. The persons with black money could not have dared to deposit all of their unearned money because they could have been identified. Now with the figures revealed by the Reserve Bank of India, it means there was very negligible amount of black money with the people and most of the black money was converted into real estate and gold jewellery. Thus the first and foremost motto of scrapping of notes was eluding. It was claimed that the notes of Rs 2000 had sophisticated features and they could not be easily counterfeited but within a month of the demonetization, the counterfeit currency appeared. The claim regarding monetary flow to the terrorists was also negated when the new notes were found with the militants in Kashmir.
The Reserve Bank of India told the Parliamentary panel that the high value notes worth Rs 15.48 lakh crore were in circulation and after note ban, junked notes worth Rs 15.28 lakh crore had come back. The top bank also said it had no information how much black money had been extinguished as a result of the note ban. When the Reserve Bank of India gave the figures to the Parliamentary committee in the last week of August, how the Prime Minister Narendra Modi while delivering the Independence Day speech announced that the government had unearthed black money worth Rs 1.25 lakh is not known. The government should give the explanation about the source of information of the Prime Minister and discrepancy of his figure with that of the Reserve Bank. Whatever may be his source, the figures of the Reserve Bank of India are final which explain that very negligible amount of black money was recovered by the decision of demonetization.
Former Governor of the Reserve Bank of India Raghuram Rajan in his book titled, ‘ I Do What I Do: Of Reforms Rhetoric and Resolve,’ said that he had advised against scrapping of notes and suggested some other alternatives. Still the Prime Minister took the decision that played havoc on the whole nation. People had to run from pillar to post to withdraw their money from banks. More than 100 people died standing in serpentine queues of banks. Many ATMs remained inoperative for weeks together. Hundreds and thousands of small business units had to down their shutters sending their employees jobless. These are few among many grievances people suffered in the wake of the note ban. It is also argued that economic growth rate has drastically fallen due to the note ban.
Now the government is shifting its stand and saying the decision on note ban was taken to digitalize the economy, the reason no one can fathom. In India where a major portion of the population is not computer literate, unfriendly to technology, where electricity and internet has an erratic supply, it is unrealistic to push towards 100 per cent digitization in banking. When the Reserve Bank of India has revealed its figures, the government instead of seeking excuses, should admit its disastrous blunder and the Prime Minister should offer his apology for the enormous travails the people had to suffer.