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Demonetisation

Demonetisation put RBI reputation at risk: Chidambaram

“In the last 50 years, no major economy has demonetised its currency. India has been added to the list that includes Zimbabwe, North Korea and Libya,” Demonetisation was a “terrible decision that was terribly implemented”.

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Kolkata, Jan 28 : Echoing former RBI Governor Y.V. Reddy, former Union Finance Minister P. Chidambaram said on Saturday that demonetisation move put the central bank’s reputation at great risk and dubbed the whole process a “command performance”.

He also dubbed the demonetisation as a “terrible decision that was terribly implemented”.

Asked whether the Reserve Bank of India (RBI) autonomy was over or not, the former Union Minister said: “On this issue, the answer is yes.”

“Reversing the sequence stipulated in the Act… instead of the Reserve Bank recommending withdrawal of legal tender status for the (high-denomination) currency, the government recommended to the bank that the legal tender status should be taken away.”

Recalling the build-up to the November 8 demonetisation announced by Prime Minister Narendra Modi, the senior Congress leader said: “That was on November 7 when the RBI Board (meeting) was called. Was there a written notice? They will not tell us.”

“How many people attended? They will not tell us. Was there an agenda paper for the meeting? Were there minutes of the meeting? They will not tell us. How long the meeting lasted? They will not tell us,” he said.

“I have information that the meeting lasted 30 minutes and the recommendations were made to the government. The Cabinet was waiting for the recommendations,” he claimed.

“How could the Cabinet know that the RBI will recommend the withdrawal of legal tender status? It was a command performance,” he said.

Echoing Reddy, Chidambaram said: “And to that extent, in this instance, the Reserve Bank’s reputation has been put at a great risk, the point which (ex) Governor Reddy made.”

The senior Congress leader said he would have resigned if demonetisation was implemented during his term as Finance Minister.

“In the last 50 years, no major economy has demonetised its currency. India has been added to the list that includes Zimbabwe, North Korea and Libya,” Chidambaram said, adding that demonetisation was a “terrible decision that was terribly implemented”.

Taking a swipe at Modi, he said: “My real grievance on demonetisation is that the decision of this magnitude with enormous consequences cannot be taken, or is not to be taken, by one person.”

Chidambaram said three important official of the Finance Ministry — the Finance Secretary, Banking Secretary and the Chief Economic Adviser — should be involved in the (any proposed) demonetisation and they should be in the forefront in telling about and defending the scrapping of currency.

He said none of them had spoken a work in the last 70 days.

“What it means is that the three most important officials of the Finance Ministry concerned were not consulted; if they were consulted, they disagreed,” he added.

Chidambaram said former RBI Governor Raghuram Rajan opposed demonetisation and formally put his view on the issue in a five-page note to the Prime Minister’s Office.

“In retrospect, I suspect one of the reasons why his term was not extended was that the government was in a hurry to demonetise,” he said.

“That is why 64 days after the new Governor (Urjit Patel) assumed office, we have demonetisation,” he added.

Demonetisation

Fake 2,000-rupee note was out within 53 days of demonetisation!

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ncrb-wefornews

By Rajnish Singh 

New Delhi, Dec 7 : It didn’t take long for fake notes of 2,000 rupees to start circulating after Prime Minister Narendra Modi announced demonetisation in November 2016, with one of its stated aims being to kill counterfeit currency, official data show.

According to the National Crime Records Bureau’s (NCRB) latest report released on November 30, a total of 2,272 fake notes of Rs 2,000 denomination were seized in 2016. Since the Rs 2,000 note — along with the new Rs 500 currency — was introduced only after November 8, 2016, it means that those counterfeiting the notes got into the act very quickly.

In just 53 days between November 8 and December 31 last year, police and other government agencies seized 2,272 fake Rs 2,000 notes — at a time when people across the country were struggling to get hold of the new currency.

The maximum number of these Rs 2,000 fake notes were seized in Gujarat (1,300), followed by Punjab (548), Karnataka (254), Telangana (114), Maharashtra (27), Madhya Pradesh (8), Rajasthan (6) and Andhra Pradesh, Arunachal Pradesh and Haryana (3 each). Jammu and Kashmir and Kerala accounted for two fake notes each. One such note was seized in Manipur as well as in Odisha.

The Rs 2,000 notes were part of the 281,839 fake notes of various denominations recovered from different locations across India.

When Modi announced the note ban, he said it was being done to end black money, counter terror financing and do away with counterfeit currency.

Among other fakes, 82,494 notes of Rs 1,000 and 132,227 of Rs 500 denomination were also seized last year along with 59,713 notes of Rs 100 and 2,137 notes of Rs 50, said the annual publication of NCRB released by Union Home Minister Rajnath Singh.

In a number of raids across the country, police forces, the Income Tax department and other government agencies also recovered 184 fake notes of Rs 20, at least 615 notes and coins of Rs 10 and 2,001 notes of Rs 5.

Also seized were 196 fake coins of Rupee 1 denomination — between January to December 31 last year.

According to the data, the face value of the total fake notes found in 2016 is Rs 101,222,821.

In terms of value of maximum fake notes, Delhi (Rs 56,521,460) topped the list.

The national capital was followed by Gujarat (Rs 23,724,050), West Bengal (Rs 23,295,800), Andhra Pradesh (Rs 9,280,000), Karnataka (Rs 8,009,136), Telangana (Rs 7,600,905), Uttar Pradesh (Rs 5,013,700), Maharashtra (Rs 4,799,700), Punjab (Rs 4,239,750), Bihar (Rs 3,736,800), Tamil Nadu (Rs 3,342,540), Kerala (Rs 2,057,200), Madhya Pradesh (Rs 1,626,890), Chandigarh (Rs 1,499,000), Rajasthan (1,035,100), Assam (Rs 800,050), Jharkhand (Rs 706,000) and Uttarakhand (Rs 666,400).

At 114,751, Delhi also topped the chart in terms of maximum seizure of fake notes, followed by Gujarat (39,725), West Bengal (32,869), Andhra Pradesh (14,541), Karnataka (14,228) and Telangana (12,667).

Among all the states and union territories, Goa accounted for just 21 fake notes having a face value of Rs 17,000.

No fake note was recovered from Chhattisgarh, Sikkim, Andaman and Nicobar Islands, Dadra and Nagar Haveli, Daman and Diu as well as Lakshadweep, the NCRB data says.

The data said a total of 1,172 FIRs were registered and 1,107 people arrested for their involvement in the illegal trade.

IANS

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Demonetisation

Demonetisation a ‘magical’ scheme that turned black into white: Rahul Gandhi

Modi had on November 8 last year announced the demonetisation of Rs 500 and Rs 1,000 currency notes.

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RAHUL-GANDHI

Dahod (Guajrat), Nov 25 : Congress Vice President Rahul Gandhi on Saturday said that demonetisation was a “magical” scheme by Prime Minister Narendra Modi that turned all the black money into white.

Addressing the “Adivasi Adhikar Sabha” (Meeting for tribal rights) in this Gujarat district, he said that while the common man stood in long bank queues for days, the rich got their old currency exchanged through the backdoor.

“There is another magic by Modiji and it is demonetisation. You all stood in bank queues, but did you see any suited-booted gentleman standing in the queue? You did not, and I will tell you why,” Gandhi said.

“It is because all the suited-booted guys entered the banks from the back door, sat in air-conditioned rooms and got their lakhs and crores exchanged. All the thieves thus got their black money converted into white through magic,” he said.

Modi had on November 8 last year announced the demonetisation of Rs 500 and Rs 1,000 currency notes.

Gandhi also attacked Modi over not fulfilling the promises he made to the tribal people.

“Modiji did not give a penny to the tribals, but he granted your land, which you call mother, worth Rs 33,000 crore to Tata’s Nano project. But the interesting thing is that I do not see any Nano cars on the roads in Gujarat or elsewhere,” he said.

Gandhi emphasised that the Congress-led United Progressive Alliance (UPA) governemnt had allocated Rs 35,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme that provided sustenance to millions across the country.

“And here, Modiji gave this much amount to just one industrialist in one single state. Be it land, be it electricity or be it Narmada’s water, everything is being given to just 5-10 select people,” he said.

Earlier in the day, Gandhi visited residences of Congress Rajya Sabha MP Madhusudan Mistry who has lost his son and that of former MP and AICC Secretary Mirza Irshad Baig who passed away recently, to convey his condolences.

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Demonetisation

Interview Niti Aayog’s Bibek Debroy: Demonetisation was for institutional cleansing

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Bibek Debroy
Bibek Debroy during an interview with IANS in New Delhi. (Photo: Bidesh Manna/IANS)

New Delhi, Nov 9: NITI Ayog member Bibek Debroy admits that demonetisation was a temporary shock on growth but asserts that the economy has now climbed back. One year into the disruptive note ban, Prime Minister Narendra Modi’s economic policy adviser says the worst is over and there are signs that things are improving now.

He also says demonetisation should not be seen through a narrow cost-benefit calculus but as a move aimed at “institutional cleansing”.

“Yes, there has been a dip, but followed by a climb back. If you look at the data, there has been a slowdown in the growth rate continuously. I have not seen any data, even remotely statistical, which suggests that demonetisation has led to a more than temporary shock in terms of growth or employment,” Debroy, who heads the Economic Advisory Council revived recently by the Prime Minister, told IANS in an interview.

Debroy said demonetisation should not be looked at only from an economic perspective.

“If I evaluate it with a narrow economic cost-benefit calculus, I think that would be unfair, because the intention (behind the move) was not narrow economics,” Debroy said. The decision was aimed at institutional cleansing. “How do I even quantify and measure it?”

“If I look at it only with that economic lens, I will evaluate the costs and the benefits in a certain way. If I look at it with a political-economic kind of lens of cleansing up the system, I will evaluate it in a slightly different way.”

Debroy said that purely in terms of economics, one will not have to wait too long as some data, like that of direct tax collections, would come out soon which would reflect demonetisation and help understand its implications.

There was “excessively high” prevalence of cash in the system till last year and cash-to-GDP ratio has now sharply declined by almost one-third post-demonetisation, he said.

Debroy said that before demonetisation, the cash-to-GDP ratio in India was almost 13 per cent. “That’s excessive. It has now come down to a little over nine per cent,” Debroy noted.

“A lot of the cash in India was excessive and was not yielding returns to the person who held the cash, nor was it performing the role that money performs as a multiplier.”

“I’m not comparing with developed countries but even if you compare with other countries in South Asia, India had too much cash,” he said.

As per estimates, the cash-to-GDP ratio was 5.8 per cent in Bangladesh, 3.5 per cent in Sri Lanka and 9.3 per cent in Pakistan in 2015, whereas in India it was 13 per cent.

“That excessive cash has now vanished. The money has now come into the banking system. But that does not necessarily legitimise that money. You have to subject yourself to further scrutiny,” Debroy said.

Debroy has come out with a compilation, “On the Trail of the Black”, along with his colleague Kishore Arun Desai, with contributions from several writers tracing the prevalence of corruption and evaluating its impact on society and the economy.

He admitted that every decision related to the demonetisation exercise might not have been perfect.

“But we know that with the benefit of hindsight…. and this kind of thing had never been attempted before,” he said.

Read more…Bollywood’s organised sections escaped impact, but daily wagers suffered

He said the biggest challenge in implementing the demonetisation decision was to maintain the surprise element which was crucial.

Kishore Arun Desai, who edited the book along with Debroy, said the war against corruption was a work in progress and November 8, 2016, should not be looked at in isolation.

“We’re talking a lot about November 8, but there are a series of actions that the government has been taking ever since coming to power, starting with setting up an SIT on black money, followed by the Benami Transactions Act, an act for transparent auction of coal mines, the Income Declaration Scheme, the RERA Act and the Jan Dhan Yojana.

“We have been witnessing the overall intent of the government of cleaning up the economy across various sectors and demonetisation was just a trigger and one of the boldest steps,” Desai told IANS.

IANS

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