Dr Manmohan Singh on #Demonetisation: Making of a mammoth tragedy


New Delhi, December 9: Former Prime Minister Dr Manmohan Singh has coherently lambasted, how PM Modi has spearheaded a “mammoth tragedy” for the entire nation vis a vis a sudden note ban of 85 % of cash earned by over a billion of Indians legitimately.

In an editorial for The Hindu on December 9, Dr Singh articulated demonetisation as “a travesty of PM’s fundamental duty to protect citizens’ rights.

Taking on PM Modi, Dr Singh quoted Modi’s address to the Nation on November 8 and said PM propounded two primary reasons for this decision– “enemies from across the border…using fake currency notes…and to break the grip of corruption and black money.”

Dr Singh hailed the intentions of the PM as a former Stateman and added, “road to hell is paved with good intentions…Waging a war on black money may sound enticing. But it cannot entail even a single loss of life of an honest Indian.” He said even previous government identified the enemies of the state but it is a duty of the Sate to protect the innocent.

He said that the demonetsiation drive led by PM Modi is based on a premise that “all cash is black money and all black money is in cash’ and this is not true. So stashing out 85 % currency to curtail black money by PM Modi is far from reality.

Wefornews sums up the reasons highlighted by the former Prime Minister in 10 points below:

1. More than 90 per cent of India’s workforce still earn their wages in cash. These consist of hundreds of millions of agriculture workers, construction workers and so on. While the number of bank branches in rural areas have nearly doubled since 2001, there are still more than 600 million Indians who do have access to banks. Cash is the bedrock of the lives of these people. To tarnish their cash as ‘black money’ and throw the lives of these hundreds of millions of poor people in disarray is a mammoth tragedy.

2. He further said, the vast majority of Indians earn in cash, transact in cash and save in cash, all legitimately. It is the fundamental duty of a democratically elected government in any sovereign nation to protect the rights and livelihood of its citizens. The recent decision by the Prime Minister is a travesty of this fundamental duty.

3. Unlike poor, holders of black money have access to various forms of wealth such as land, gold, foreign exchange, etc. Evidence from the past attempts has shown all black money is not in cash, only a tiny fraction is.Against this backdrop, the decision by the Prime Minister is bound to have obverse implications by causing grievous injury to the honest Indian who earns his/her wages in cash and a mere rap on the knuckles to the dishonest black money hoarder, pointed Dr Singh.

4. Making things worse, the government has made it easier to generate such unaccounted wealth in the future by the introduction of a Rs.2,000 note. This brazen policy measure has neither tackled the stock of black money holistically nor has it stemmed the flow of it.

5. As for logistical challenge of replacing billions of old currency notes, former PM said that being a monumental task, most nations that have undertaken currency swap operations have done so over a certain time period and not as a sudden overnight operation. It is heartbreaking to see and hear of millions of poor Indians standing in long lines to withdraw some money for basic sustenance, pointed out Singh.

6. As someone who has experienced long lines for rationed food during war time, I never imagined that one day I would find my own countrymen and women waiting endlessly for rationed money. That all of this suffering is due to one hasty decision makes it even more disconcerting.

7. Coming to macroeconomic impact of noteban, Singh said it is going to be hazardous. At a time when India’s trade numbers are at multi-year lows, industrial production is shrinking and job creation is anaemic, this policy can act as a negative shock to the economy.

Read More: Manmohan Singh tears apart govt’s take on demonetisation

8. India’s cash to GDP ratio is very high vis-à-vis other nations. But this also indicates that Indian economy is dependent on cash. Consumer confidence is an important economic variable in a nation’s growth prospects. This sudden overnight ban on currency has dented the confidence of hundreds of millions of Indian consumers, which can have severe economic ramifications.

9. The scars of an overnight depletion of the honest wealth of a vast majority of Indians combined with their ordeal of rationed access to new currency will be too deep to heal quickly. This can have ripple effects on GDP growth and job creation. Singh highlighted how India as a nation should brace up for “a tough period over the coming months, needlessly so.”

10. Taking a jibe at central government Singh concluded his article by saying that it may be “tempting and self-fulfilling” for current government to believe that they have “all the solutions and previous governments were merely lackadaisical in their attempts to curb black money.” It is not so, said Singh adding that Leaders and governments have to care for their weak and at no point can they abdicate this responsibility.

Earlier in the Rajaya Sabha, Dr Singh highlighted Prime Minister Narendra Modi’s demonetisation drive as “monumental management failure and legalised plunder.”

Wefornews Bureau

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