Withdrawal of bank notes puzzling, won’t drain illegal cash: Chidambaram | india-news | Hindustan Times
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Withdrawal of bank notes puzzling, won’t drain illegal cash: Chidambaram

The government’s move to introduce Rs 2,000 note while withdrawing other banknotes of high value is puzzling and might not help drain illegal cash from the economy as aimed, the Congress said on Wednesday.

black money crackdown Updated: Nov 09, 2016 16:37 IST
Dhrubo Jyoti
Former union minister of finance P Chidambaram.
Former union minister of finance P Chidambaram.(Sonu Mehta/HT File Photo)

The government’s move to introduce Rs 2,000 note while withdrawing other banknotes of high value is puzzling and might not help drain illegal cash from the economy as aimed, the Congress said on Wednesday.

Speaking to reporters in Delhi, senior party leader P Chidambaram said the withdrawal of Rs 500 and Rs 1,000 notes may not curb black money flow as unaccounted cash will be stashed in gold.

“Why the government chose to issue Rs 2,000 note is a puzzle to me. The move to demonitise didn’t work in 1978 either,” the former finance minister said.

Read | Rs 500, Rs 1000 junked: How PM’s currency shakeup can help Indian economy

His comments came hours after Congress vice-president Rahul Gandhi hit out at Narendra Modi, saying the prime minister wasn’t concerned about the poor, who would be inconvenienced by the currency shake up.

The government’s surprise move on Tuesday evening sparked panic across the nation with widespread confusion and long queues at banks and automatic teller machines. Under the new currency regime, ATMs will start dispensing new Rs 500 and Rs 2,000 notes from Thursday and people can deposit the older Rs 1,000 and Rs 500 notes in the bank.

But Chidambaram said the new regime was likely to hurt those who were not part of the formalized economy – such as farmers, small traders and daily workers -- but whose incomes were entirely legitimate.

Read | Can deposit as much cash as you want in bank, no immunity for black money: Govt

“The test of the scheme would be to see how much of the money is legally exchanged and how much of it is demonitised.”

“When homemakers, traders, farmers go to deposit their money, the government owes it a quick and efficient exchange to them. They shouldn’t be harassed.”