Organised loot, legalised plunder: Manmohan on demonetisation

Former Prime Minister Dr Manmohan Singh today labelled the abolition of Rs500 and Rs1,000 notes "a monumental management failure", calling it a case of organised loot and legalised plunder of the country.

Prime Minister Narendra Modi was present in parliament as his predecessor said, "I do not disagree with the objectives, but there is monumental mismanagement of which there are no two opinions in the country as a whole."

Singh, a former World Bank economist, opened the debate in the Rajya Sabha on demonetisation on behalf of the Congress party. He said that while he could not presume to know "the final outcome", agricultural and economic growth will be dented by the PM's sudden cancellation on 8 November of the high-denomination currency.

"In the process of demonetisation, monumental mismanagement has taken place. Those who say this measure may cause distress in the short run but will be in the interest of the country in the long run remind me of John Keynes' words, 'in the long run we are all dead'," Singh said.

On the prime minister asking for ''50 days to cleanse the nation'', Singh raised the trouble faced by the common man and the death of 60-65 people in demonetisation-related incidents, with snaking queues at banks and ATMs.

"The PM said we should wait 50 days. For the poor and deprived sections, even 50 days' torture can bring about disastrous effect. I say, with all responsibility, that we do not know what will be the final outcome," Singh said.

''What has been done can erode our people's confidence in the currency and banking system. I would like to know from the PM the names of any country where people have deposited their money in a bank, but aren't allowed to withdraw the money," Singh said.

Underlining that the demonetisation will hurt agricultural growth and small industry, Singh said, "This alone is enough to condemn what has been done in the name of the greater good of the people. In my opinion, this scheme, the way it is implemented will hurt agricultural growth in our country, will hurt small industry and will hurt all those people who are in the informal sector of the economy."

On forecasts that India's GDP will decline by 2 percentage points due to the demonetisation, Singh said, "This is an underestimate. I feel the PM must come up with some constructive proposal of how we can implement this scheme and at the same time prevent distress to the common people."

Singh also hit out at the government over modifications every day in the banking process saying, "It is no good that every day banks come with modifications of the rules under which people can withdraw money. This reflects very poorly on the PMO, the finance minister's office, and on the RBI. I am very sorry that the RBI has been exposed to this sort of criticism, which I think is fully justified."

Singh urged the prime minister to find practical and pragmatic ways and means to relieve the distress on the people.

Since the winter session of parliament began last week, the opposition has attacked the government for failing to anticipate the shortage of cash that has rocked the country since the notes were demonetised with just a few hours' notice.