All high sounding claims on demonetization burst like bubbles: P M should offer apology for wreaking havoc on people


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.


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