New Delhi : Calling demonetisation a “decision taken without forethought” and the “single biggest case of total mismanagement”, Congress leader P. Chidambaram on Friday said all its stated objectives have failed and the government’s insistence on digital transactions is infested with “serious issues”, including of privacy.
Chidambaram, a former Union Finance Minister, also said demonetisation has led to administrative collapse and widespread corruption and “this is the most momentous decision taken without consulting key officials who are connected by virtue of the office they hold directly connected with this decision”.
“It is now abundantly clear that the whole exercise was undertaken without forethought and planning; without consulting key officials; without understanding the crucial role of money in circulation; and without assessing the capacity of the currency printing presses to supply new notes,” he said.
“Altogether, the whole exercise has been a case of total mismanagement, administrative collapse and widespread corruption,” he added.
Prime Minister Narendra Modi announced the scrapping of high-denomination currency notes on November 8 night, and subsequently sought 50 days to put things in order.
Chidambaram said the Congress would have pledged support to demonetisation if the objectives were to unearth and stamp out black money and end corruption, but that has not happened.
“Events of the last 50 days have proved that none of the stated objectives has been served. Hoards of black money in new Rs 2,000 notes have been found. There is no guarantee that black money will not be generated in future or that bribes will not be given or taken in future in the new currency notes,” he said.
He said the government had tried to change the narrative of the demonetisation move from black money and corruption to a cashless economy.
“No economy can become — or has become – totally cashless. We support encouraging high-value transactions to adopt the digital mode, but to insist that even low-value transactions should go cashless is an absurd and undesirable goal.
“There are serious issues of privacy and cost to the payer and the payee. These issues require serious debate,” he added.
On a question that Finance Minister Arun Jaitley’s statement that the people of the country have supported demonetisation, Chidambaram said: “What else would do the people whose access to their own money has been withheld. They have to get the money to keep the home fires burning. I think there is a mistake in assuming that people who are patient are not angry.”
To a question whether the economy will go through a contraction, he said: “Increase in tax revenues has no direct co-relation to the performance of the GDP. Numerous analysts and numerous agencies have predicted or forecast that the GDP will take a hit and even the RBI has said that the GDP will take a hit by 0.5 per cent.
“So, I think the Finance Minister should pose his questions to the RBI and RBI should answer that question. As far as GDP is concerned, I said there are different estimates.
“The estimates vary from 0.5 per cent made by the RBI to 2 per cent made by Manmohan Singh. Now where it will ultimately fall, I cannot say but a hit of 1 per cent means Rs 1.5 lakh crore loss.”
On the issue of privacy, Chidambaram said: “High value transactions must be nudged into the digital mode while selling and buying properties, buying jewellery, paying certain taxes, all that can be pushed to digital mode.
“But if I want to buy something in a village market, why I should move to digital mode and if you reflect on the statement, there is a serious issue of privacy. There is serious issue of cost to the ‘payer’ and the ‘payee’.”