September 20, 2018

Demonetisation was a black day for our economy, democracy: Manmohan Singh

08 November 2017, 12:39 | Megan Pierce

Manmohan Singh

Manmohan Singh

Tomorrow we mark one year since the disastrous policy was thrust on the people of our country. "I repeat as I stated in parliament, this was organised loot and legalised plunder", Singh said.

"A step like demonetisation and if you link it to various steps government has taken, I think we've succeeded in bringing to centrestage the issue of how financial transactions in a country like India ought to be carried out", the FM said.

He said demonetisation had "ethical and moral" rationale behind it and therefore it was also "politically correct". Finance minister Arun Jaitley defended the move, saying demonetisation was a watershed moment that had not only worked to curb illegal wealth creation, but also spurred the creation of a less-cash economy.

Singh pointed to the fall in GDP since November 2016. "It has broken the back of our small businesses", he added.

All this has sown a deep-rooted fear of tax terrorism among the business community.

At a time when the economy has slowed down considerably, despite favourable global macroeconomic conditions, the fear of tax terrorism has eroded the confidence of businesses to invest. "This is bad for India's economy".

"I began today with a heavy heart".

While Prime Minister Modi did not mention about the aim to reduce cash transactions in his November 8 speech previous year, the government, however, later said the note ban was also aimed at to make India a less-cash economy.

It was a clever ploy on the part of the Congress to hit out at Modi in his home state by deploying a former PM who also happens to be an eminent economist.

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Citing examples of Surat's textile industry, Morbi's ceramic industry and Rajkot's auto components industry, Singh said that the domestic industry could not cope with the impact on the economy, resulting into China benefiting through increased imports.

'This twin blow is a complete disaster for our economy.

"Since July, 60,000 looms in Surat alone has been discarded". The impact in the rest of the country is equally bad if not worse'. He blamed demonetisation for the increased imports from China.

At the media interaction, Dr Singh belted out some hard economic facts and said that for growth to now measure up to the 10-year average of the United Progressive Alliance government, led by him, the economy will have to grow at 10.6 per cent in the NDA's fifth year in power. "These twin blows damaged India's medium and small manufacturing sectors and our businesses had to run to Chinese imports at the cost of Indian jobs".

Former prime minister Manmohan Singh argued the opposition's case, claiming that not only was demonetisation a flawed decision that had caused a needless disruption to the Indian economy, but it also risked unleashing harassment by tax sleuths probing illegal deposits.

"Bullet train, launched with much fan fare, is an exercise in vanity". Did the Prime Minister consider the alternative of introducing High Speed Rail across India, by upgrading the existing broad gauge infrastructure?

Noting GDP growth rate dropped to 5.7 percent due to demonetization and every one percent loss of GDP annually costs the nation Rs 1.5 lakh crore, the former prime minister charged the NDA government did not learn any lessons and went ahead with GST which further wrecked the economy.

"Is everyone who questions the outcome of demonetisation and GST a tax evader?"

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