Note ban: what happened behind scenes, asks Cong

New Delhi:31/12:On the expiry of the 50-day demonetisation exercise, former Finance Minister P Chidambaram described the note ban exercise as a case of “total mismanagement, administrative collapse and widespread corruption”.
The former Finance Minister was at his acerbic best while contrasting the “mismanagement” of demonetisation and latest revelations about blackmoney and corruption, with the Prime Minister Narendra Modi’s assertion that he has “destroyed the world of terrorism, drug mafia, human trafficking and underworld”.
Was procedure followed?
Raising serious doubts about due diligence and consultation before 86 per cent of the currency in circulation was sucked out, Chidambaram demanded that the government make public the Cabinet note on demonetisation on November 8 as well as the Agenda Note and the minutes of the meeting of the Board of Directors of RBI held on November 8.
‘A command performance’
Chidambaram said it is critical that these documents are made public because the suspicion is that it was “not a process but a command performance”.
“I make this demand because the country has a right to know how three wise men and the RBI Governor took just 30 minutes to wipe out 86 per cent of the currency in circulation. We are still a free country, the people have a right to know what was there in the Agenda Note…was there at dissent note?” Chidambaram said.
Takes on RBI Governor
Questioning the process as well as the diligence of the RBI Governor, Chidambaram caustically recalled, “We have had a distinguished line of Governors in the RBI from Dr C Rangarajan, Dr Bimal Jalan, Dr YV Reddy, D Subbarao to Dr Raghuram Rajan. In 20 years, none of them thought demonetisation was an effective way of eradicating corruption and blackmoney. I must complement Dr Urijit Patel that he hit upon such an idea within 59 days of taking over as RBI Governor.”
“I had cautioned that the test of demonetisation lies in the manner in which it will be implemented. 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 the money in circulation; and without assessing the capacity of the currency printing presses to supply new notes. Besides, the seizure of bundles of new ₹2,000 notes is clear evidence of corruption at the level of the RBI, the currency chests and the bank branches,” said Chidambaram.
Damage to economy
Reacting to Finance Minister Arun Jaitley’s statement about high tax collections and minimal impact of demonetisation on economy, Chidambaram said, “Increase in tax revenue has no direct correlation with the performance of the GDP”. He said the RBI’s own assessment about demonetisation impact on GDP is 0.5 per cent while former Prime Minister Manmohan Singh estimates it to be about 2 per cent.
“There is a consensus about it being 1 per cent, which translates to ₹1.5 lakh crore as damage to the economy due to demonetisation,” said Chidambaram.
Will curbs cease?
The former FM said since ministers in the government and the PM himself had “dubbed all of us in the Opposition as supporters of black money hoarders and tax evaders”, the PM should make a categorical announcement on whether restrictions on money will ease once the deadline he has set comes to an end.
“It is fair to expect that beginning Monday, January 2, 2017, all restrictions on money imposed on November 8, 2016 will be removed and the people will be able to withdraw the money in their bank accounts. It is fair to expect that there will be no queues outside bank branches and ATMs,” quipped Chidambaram.
He pointed out that as he had cautioned on November 9, the day after the PM announced the decision with regard to demonetisation, the stated objectives of wiping out blackmoney and corruption will not be met.
“Events of the last 50 days have proved us correct. Hoards of black money in new ₹2,000 notes have been found. Bribes have been given and taken in new ₹2,000 notes. There is no guarantee that black money will not be demanded or generated in future or that bribes will not be given or taken in future in the new currency notes,” said Chidambaram.