Singh rips DeMo to shreds

Ad­vises against “unortho­dox, short-term” steps

Financial Chronicle - - FRONT PAGE - FC BUREAU

FOR­MER prime min­is­ter and Congress leader Man­mo­han Singh on Thurs­day tore apart Modi govern­ment’s de­mon­eti­sa­tion ex­er­cise on its sec­ond an­niver­sary, call­ing it an ‘ill-fated’ and ‘ill-thought’ ex­er­cise. As the “scars and wounds” of note ban are be­com­ing more vis­i­ble, Singh ad­vised the govern­ment to not re­sort to fur­ther “unortho­dox and short-term eco­nomic mea­sures.”

The sec­ond an­niver­sary of the note ban is a day to re­mem­ber how ‘eco­nomic mis­ad­ven­tures’ can roil the na­tion, Singh, him­self a re­puted econ­o­mist, said. He is also called the ar­chi­tect of eco­nomic re­forms for he ini­ti­ated eco­nomic lib­er­al­i­sa­tion as the fi­nance min­is­ter in the Narasimha Rao govern­ment in 1991.

“The fi­nan­cial mar­kets are volatile as the liq­uid­ity cri­sis wrought by de­mon­eti­sa­tion is tak­ing its even­tual toll on in­fra­struc­ture len­ders and non­bank fi­nan­cial ser­vices firms,” Singh said.

Ask­ing the govern­ment to re­store cer­tainty and vis­i­bil­ity in eco­nomic poli­cies, the for­mer prime min­is­ter said, “Note­bandi im­pacted ev­ery sin­gle per­son, re­gard­less of age, gen­der, reli­gion, oc­cu­pa­tion or creed.”

In a tele­vised ad­dress to the na­tion, prime min­is­ter Naren­dra Modi on Novem­ber 8, 2016 an­nounced that Rs 1,000 and Rs 500 cur­rency notes would no longer be valid.

It is of­ten said that time is a great healer. But un­for­tu­nately, in the case of de­mon­eti­sa­tion, the scars and wounds of de­mon­eti­sa­tion are only get­ting more vis­i­ble with time — Man­mo­han Singh

Speak­ing in Par­lia­ment in the same year, Singh had called the note ban “or­gan­ised loot and le­galised plun­der.” He had said the note ban would shave off 2 per cent of the GDP.

In a fresh and scathing at­tack on the govern­ment, the for­mer prime min­is­ter said the full im­pact of de­mon­eti­sa­tion ex­er­cise is yet to be un­der­stood and ex­pe­ri­enced. “With a de­pre­ci­at­ing cur­rency and ris­ing global oil prices, macro-eco­nomic head­winds are also start­ing to blow now,” he said, adding that it is, there­fore, “pru­dent to not re­sort to fur­ther unortho­dox, short-term eco­nomic mea­sures” that can cause more un­cer­tainty in the econ­omy and fi­nan­cial mar­kets.

“It is of­ten said that time is a great healer. But un­for­tu­nately, in the case of de­mon­eti­sa­tion, the scars and wounds of de­mon­eti­sa­tion are only get­ting more vis­i­ble with time,” he said. Small and medium busi­nesses that are the cor­ner­stones of In­dia’s econ­omy are yet to re­cover from the de­mon­eti­sa­tion shock, Singh said. “This has had a di­rect im­pact on em­ploy­ment as the econ­omy con­tin­ues to strug­gle to cre­ate enough new jobs for our youth.”

For­mer fi­nance min­is­ter P Chi­dambaram called note ban an in­ge­niously de­signed of­fi­cial money-laun­der­ing scheme. Re­act­ing to fi­nance min­is­ter Arun Jait­ley’s de­fence that con­fis­cat­ing cur­rency was not an ob­jec­tive of de­mon­eti­sa­tion, Chi­dambaram asked, “Will some­one please re­mind him of what he told the me­dia and what the At­tor­ney Gen­eral told the Supreme Court?”

“The dream was to gain Rs 3 lakh-Rs 4 lakh crore…Thanks to ram­pant money laun­der­ing at bank coun­ters, that dream turned into a pipe dream,” Chi­dambaram said.

AAP leader and Delhi chief min­is­ter Arvind Ke­jri­wal de­scribed the move as “a self-in­flicted deep wound on the econ­omy.” “Though the list of fi­nan­cial scams of Modi govern­ment is end­less, de­mon­eti­sa­tion was a self­in­flicted deep wound on In­dian econ­omy which even two years later re­mains a mys­tery... why the coun­try was pushed into such a dis­as­ter,” he asked.

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