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Manmohan Singh trashes Modi’s cash crackdown as ‘organised loot’

Manmohan Singh trashes Modi’s cash crackdown as ‘organised loot’

Former Prime Minister Manmohan Singh, in the Rajya Sabha on Thursday, said demonetisation of Rs 500 and Rs 1,000 currency notes was a “monumental management failure” and “organised loot and legalised plunder”.

Singh, also a former Union finance minister and Reserve Bank of India (RBI) governor, said the decision would result in erosion of gross domestic product by two percentage points, adding that this was an “underestimate”.

Highlighting the suffering of the poor, the former PM said his successor “must come up with some constructive proposal on how we can implement the scheme and at the same time prevent the distrust that has been caused to the common people.”

On the government’s repeated fresh instructions and modifying of rules every day, Singh said: “That reflects very poorly on the Prime Minister’s Office, the finance minister’s office and on the Reserve Bank of India.”

Singh, who had served as the governor of RBI in the mid-1980s, said: “I am very sorry that the Reserve Bank has been exposed to this kind of criticism, which I think is fully justified.”

Singh countered the argument that the move might have caused harm in the short run but was good in the long run, by quoting economist John Maynard Keynes: “in the long run, all of us are dead”.

In his speech, Singh said the PM, even in this late hour, could find steps to bridge the distrust the decision has caused among people. The former PM said agriculture, unorganised sectors and small industry has been hit hard by it and people were losing faith in the currency and the banking system.

He said the PM’s decision was taken “overnight”. “My own feeling is that the national income, that is the GDP of the country, can decline by about 2 per cent as a result of what has been done. This is an under-estimate and not an over-estimate.”

Singh also disagreed with the PM’s appeal to the people that the pain was only for 50 days. “Well 50 days is a short period, but for those who are poor and deprived sections of the community even 50 days of torture can bring about disastrous effect. And that’s why about 60 to 65 people have lost their lives. Maybe more.”

He also asked PM Modi to give names of countries where people were not allowed to withdraw their money from banks. “This alone I think is enough to condemn what has been done in the name of greater growth.”

He said there were no two views in the country that the decision was a “monumental mismanagement”. He said the move had hurt the great majority. “After all, 90 per cent of our people were in the informal sector, 55 per cent of our workers in agriculture are feeling distress,” he said. Singh also noted that the cooperative banking system, which serves farmers and people in rural areas, was non-functional and had been prevented from handling cash.

Later in the day, Union Finance Minister Arun Jaitley, in a reference to the former PM, said it was no surprise that Singh was unhappy as “maximum black money was generated under his rule.” To the former PM’s forecast of a two percentage-point decline in GDP, the FM said demonetisation would have positive impact on the economy over medium to long term, as money from the shadow economy would find its way into the mainstream.

The harsh words exchanged inside and outside the House, however, didn’t take away from parliamentary decorum.

As the House broke for lunch at 1pm, after Singh and a couple of others speakers had criticised the government, the PM, with Jaitley in tow, walked across to the Opposition benches and shook hands and chatted with Singh, Ghulam Nabi Azad and other leaders of the Congress and other Opposition parties.

Singh’s speech was buttressed by a joint show by the Opposition, which outmanoeuvred the ruling coalition by cementing cracks in its ranks government strategists had attempted to exploit. It also demanded that the chair allow the former PM to speak during the Zero Hour when the House convened at 11 am.

Finance Minister Jaitley, also the Leader of the House, strongly objected to this, but the chair said it had no option but to allow Singh to make his statement. When Jaitley persisted that Singh be allowed to speak only during the discussion on demonetisation and asked the Opposition to resume it, Opposition leaders demanded Prime Minister Modi be present in the House during the discussion.

The PM appeared in the House once it reconvened at 12 noon. The suggestion from the Opposition that the House resume the discussion as the PM was in the House and dispense with the Question Hour was accepted.

However, the Opposition leaders insisted that the House would discuss the issue only on the precondition that the PM sat through the proceedings. The Rajya Sabha discussed the issue for an hour before breaking for lunch. However, the PM didn’t attend the House after the lunch break leading to Opposition protests and repeated adjournments.

Jaitley said the Opposition was not prepared for the discussion and were now finding excuses to run away from the debate. He said the PM would participate in the debate.

Earlier, the Lok Sabha was also adjourned for the day after Opposition protests. Parliament is unlikely to transact any business on Friday, as also on Monday, the day the Opposition has planned nationwide protests against demonetisation. Jaitley said the people were with the government on the issue.

According to Congress sources, the former PM was fielded as his reputation was unimpeachable and strong words from a soft-spoken man would have the maximum impact.

That Singh is a well-known economist, a former RBI governor, and had also served as the finance secretary, the chief economic adviser, and the deputy chairman of the erstwhile Planning Commission, meant what he had to say would be taken seriously.

The Congress also reminded the Treasury benches that during a debate on the questionable allocations of coal mines in the Rajya Sabha on August 30, 2013, when the Opposition had demanded that the then PM be present throughout the debate, he had accepted.

Congress leader Jairam Ramesh said the note ban debate would not resume till the PM attended and responded. He said 22 speakers were left, which would take about four hours. “Why can’t the PM spare this much time to the House?” Ramesh said.

Trinamool Congress member Derek O’Brien and Samajwadi Party’s Naresh Agarwal were the other speakers on Thursday.

O’Brien said the PM was trying to paint a picture in which he was the messiah and all others devils. He said his party chief and West Bengal Chief Minister Mamata Banerjee would not stop her protests even if the Modi government were to harass her by using its investigating agencies or putting her in jail. Addressing the PM, he said: “One cannot find a solution with someone with hubris. Hubris is extreme self-confidence before nemesis.”

On the secrecy that was maintained before the announcement, O’Brien said secrecy was ensured before the dropping of the atom bombs (on Hiroshima and Nagasaki in the Second World War), and “then you know what happened”.

 

Source: Business Standards

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