THE RESERVE Bank of India’s disclosure that almost 99.3 per cent worth of currency notes that were in circulation on November 8, 2016 have come back into the banking system will be taken into account by the Parliamentary Standing Committee on Finance as it “supports” the contention that demonetisation was a “failure”, the panel’s chairman M Veerappa Moily said on Wednesday even as the Congress demanded an apology from Prime Minister Narendra Modi for the “monumental folly”.
The Congress said demonetisation was a “surgical strike” conducted by the Prime Minister on the Indian economy. “We would like to ask the Prime Minister who is going to answer, who is accountable for this monumental folly which caused pain to each and every Indian, destroyed the Indian economy, destroyed the international image of India and brought absolutely no gain to the country,” Congress spokesperson Manish Tewari said. He said the Prime Minister of any other country would have resigned taking moral responsibility in such a situation but “it will be too much to expect from him”.
Former Finance Minister P Chidambaram said the “government and RBI actually demonetised only Rs 13,000 crore and the country paid a huge price”. He said the “bulk of the Rs 13,000 crore is currency in Nepal and Bhutan and some that was lost or destroyed”.
“Indian economy lost 1.5 per cent of GDP in terms of growth” because of demonetisation, he said. “That alone was a loss of Rs 2.25 lakh crore a year,” he said. “Over 100 lives were lost. 15 crore daily wage earners lost their livelihood for several weeks. Thousands of SME units were shut down. Lakhs of jobs were destroyed.” Taking a dig at Modi, he asked: “Remember who had said that Rs 3 lakh crore will not come back and that will be a gain for the government!?”
Talking to The Indian Express, Moily said, “If 99.3 per cent of the demonetised notes are back in the banking system… then what was the purpose of the exercise. Where is the black money? Where is the fake money. It means they are confessing that it was not a success.” The Standing Committee on Finance could not adopt a draft report on demonetisation which was critical of the government because of opposition from ruling BJP members.
Moily said the panel will meet again next month. “We are going to have an in depth, detailed discussion on it,” he said. Asked whether the RBI’s disclosure will be taken into consideration, he said “yes”. “That is supporting the plea that it was a failure… we have already examined (the matter). The RBI Governor has given the evidence… we are not again calling for evidence from the RBI or the Secretary, Financial Services… but we are going to redraft the report on the basis of the evidence already placed.”
He said the latest RBI report “further strengthens the original draft”. He said the original draft said demonetisation was “not successful and not served the purpose”.