The former prime minister said that while he did not disagree with the objectives of the move, it was a monumental management failure.
Former Prime Minister Manmohan Singh, in the Rajya Sabha on Thursday, said the government’s move to demonetise Rs 500 and Rs 1,000 notes was a form of “organised loot” and that it would reduce the country’s Gross Domestic Product by 2% or more. Singh, who has also served as the finance minister and is a noted economist, said ordinary people were suffering because of the imposition of the move overnight by Prime Minister Narendra Modi.
“The prime minister has been arguing that this is the way to curb black money, to prevent the growth of fake currency notes and help control terrorism. I do not disagree with these objectives, but in the process of demonetisation, monumental mismanagement has been undertaken.” Singh quoted economist John Maynard Keynes to dismiss the Centre’s defence that the move would help in the long run, saying “In the long run, we are all dead.”
The Congress leader also said that the Centre’s insistence that people should wait 50 days to estimate the effects of the move was not good enough, as “50 days can bring about disastrous effect for the poor”. Singh said more than 60 to 65 people have lost their lives since the move was announced on November 8. Moreover, he said, the decree could “weaken and erode people’s confidence in the currency and banking system”.
“People have money in the bank, but they are not allowed to withdraw it. This alone is enough to condemn what has been done,” he said. Singh added that given the way the scheme has been implemented, it will hurt agricultural growth, small industries and the informal sector. “The GDP of the country can decline by about 2% points as the result of what has been done, and this is an underestimate and not an overestimate.”
Singh said Modi must come up with “a constructive proposal on implementing the scheme while preventing the distress caused to common people.” He said bringing in modifications to the system every day reflects poorly on the Prime Minister’s Office and, the Finance Minister’s Office and the Reserve Bank of India. He said he was sorry that the RBI had been exposed in this way.
Singh urged Modi to “find practical, pragmatic ways to relieve the distress of the people, who happen to be a majority. After all 90% of our people work in informal sector, and 55% of workers in the agricultural sector are reeling.”
He concluded his address by saying that the way the scheme has been implemented is “a monumental management failure and is a case of organised loot and legalised plunder”.
Watch his full speech.