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It’s Arun Jaitley versus Manmohan Singh in the great Indian demonetisation debate

Finance minister Arun Jaitley takes on former prime minister Manmohan Singh, who has criticised the NDA government’s demonetisation exercise.

black money crackdown Updated: Nov 07, 2017 22:41 IST
HT Correspondents
HT Correspondents
Ahmedabad/New Delhi
Demonetisation,Demonetisation in India,One year of note ban
While Manmohan Singh said “demonetisation was an organised loot and legalised plunder”, finance minister Arun Jaitley said the loot was what happened in 2G scam, Commonwealth Games and the allocation of coal blocks. (Photo: Agencies)

Charges flew thick and fast between the government and the main opposition party on Tuesday over what demonetisation had achieved for the economy, a day before the first anniversary of Prime Minister Narendra Modi’s watershed decision to ban high-value banknotes.

In a blog early on in the day, finance Minister Arun Jaitley called the move an “ethical drive” that had rooted out corruption from the economy. Shortly after, former Prime Minister Manmohan Singh responded, saying the scrapping of 500-and 1000-rupee currency bills was a reckless step that helped “organised loot and legalised plunder”.

Ever since the shock clampdown on high-value bills, both government and the opposition have differed on what it meant for the economy. By rendering high-value notes useless in one stroke, the government said it had exposed hoarders of undeclared wealth, or black money, forged a more digitised economy and widened the tax base.

Those opposed said the decision had crimped the economy with no benefits and much pain for the poor.

To mark its first anniversary, the government has planned a publicity blitzkrieg to showcase what it says is the success of demonetisation. The Congress and other opposition parties will respond with a so-called black day themed on “the country is suffering”.

On Wednesday, Singh said the NDA government had not learnt any lessons from their “monumental blunder”, as he compared the country’s economic growth on his watch to that under Modi.

“Tomorrow will mark exactly one year since the disastrous policy of demonetisation was thrust on the people of India. I say with immense pain and a sense of responsibility that 8 November was a ‘black day’ for our economy,” he told journalists in Ahmedabad.

The renowned economist said the economy would have to grow at 10.6% in the Modi government’s fifth year for it to measure up to the 10-year average growth under the United Progressive Alliance (UPA) government led by him.

The counterattack from the government was swift.

“An anti-black money drive is (an) ethical drive, a moral step. And what is morally and ethically correct has to be politically correct,” Jaitley told a press conference.

“November 8, 2016 would be remembered as a watershed moment in the history of Indian economy.”

In his blog, Jaitley also said the next generation will judge the decision with a great sense of pride as it had provided them a “fair and honest system to live in”.

The finance minister quoted central bank figures to show how cash in the economy had gone down by Rs.3.89-lakh crore, something that help weed out black money and corruption.

“Why should we remove excess currency from the system? Why should we curtail cash transactions? It is common knowledge that cash is anonymous,” Jaitley said, listing the benefits of demonetisation such as a cleaner financial system, a digitised economy and wider tax base.

“With the return of Rs.15.28 lakh crore in the formal banking system, almost entire cash holding of the economy now has an address. It is no more anonymous.”

First Published: Nov 07, 2017 18:55 IST