Demonetization of Notes Biggest Scam India has ever seen – P C Chacko
Mangaluru: “Today, a month after the central government’s pompous “Surgical strike” on the galloping Indian economy, every 125 crore Indian citizens have been haggard beyond any respite on the horizon. A haphazardly planned decision of ‘demonetization’ or ‘note change’ has brought a fast developing nation to its knees equalizing the country to the economic level of Cuba. Demonetization is the biggest scam, India has ever seen”, said the spokesperson of the All India Congress Committee P C Chacko in a press meet held at the District Congress office, Mallikatta here on December 10.
Addressing the media persons Chacko said, “At the stroke of midnight on 8 November 2016, the confidence of more than a billion Indians was destroyed with the invalidation of high denomination currency notes of Rs 500 and Rs 1000. The value of withdrawn currency is Rs14.08 lakh crores, which is 86.4% of the total value, (Rs 16.4 lakh crores) of currency notes in circulation. The stringent limits on cash withdrawals, long queues outside banks and non-functioning of ATMs indicate not only the governments’ unpreparedness to handle the situation but thoughtlessness as to the short and long term consequences of the act, apart from some hidden motives behind the drastic action”.
He further said, “The propagandised objective of the government for demonetization was to stop terror funding, remove counterfeit currency and flush out black money. Terrorism in India is not home grown but cross-border terrorism: This is sponsored by international funding and its source is outside India and the currency deployed is rather international currencies and not Indian rupees. Thus demonetization of the rupee does not really address the problem. Counterfeit currency was not such a big issue to necessitate such a drastic action. According to the study by Indian statistical institute in 2015, the value of Counterfeit notes in circulation at any given point of time was approximately Rs 400 crores which are a mere 0.025% of the total budget outlay of Rs 19.78 lakh crores. It does not make sense to invest Rs 12,000 crores in printing new notes just to put out of circulation counterfeit notes worth Rs 400 crores only”.
He also said, “According to some estimates, cash money consists of just 6% of the unaccounted wealth. The rest is in other forms of investments like real estate, bullion, foreign currencies, foreign accounts, etc. Even by conservative estimates, the black wealth is around 20% of GDP. This means that the annual generation of black wealth is around Rs 30 lakh crores. The value of the withdrawn currency is approximately Rs 14 lakh crores.
He said, “Without structural changes, institutional and tax policy reforms, it is not possible to hit out at the root causes that generate black wealth and operates as a parallel economy. Withdrawing higher denomination currency is not going to make any major impact on the black economy since it does not address the genesis of the problem of
black money generation. The sudden announcement to demonetize the high denomination notes has unleashed a reign of chaos on unsuspecting citizens”.
Chacko stressed that prime minister Narendra Modi said that within 50 days, things would normalise. However, the existing capacity for printing currency notes indicates otherwise. The decision of demonetization has led to the withdrawal of 86% of the currency in circulation. 1658 crores notes of Rs 500 and 668 crore notes of Rs 1000 valuing about Rs 14.08 lakh crore have been withdrawn. Rs 1000 notes are printed by “Bharatiya Reserve bank note Mudran Private Limited”. It has the capacity to print 133 crore notes per month in two shifts. Even if three shifts were to work, this company can print only 200 crore notes per month. If this government company was to print new Rs 2000 notes as against the old Rs 1000 notes which are 668 crores in number, this entire operation will take 3.5 months.
Rs 500 notes are printed by “Security printing and minting corporation of India limited”, which has the capacity to print 100 crore notes per month. If the capacity is doubled overnight, it will still take nearly 8 months or more to print 1658 crore notes of Rs 500. At the current capacity of currency notes production, even if maximized fully, a shortage will prevail for at least 12 to 15 months. The demand for currency note production will be so high that printing of notes to keep as reserves to cover unforeseen circumstances like natural calamities, inflation, GDP growth will be severely constrained.
Banks do not have cash and ATMs do not have notes. In a country of 125 crore people, there ’are only 2 lakh ATMs. At the rate the ATMs are being recalibrated to accommodate new currency notes, it would take at least another 90 days to upgrade all the ATMs.
The central government has changed the rules and objectives of demonetization 18 times in the first nine days and the rules are changing every day that the general public is totally confused. The economy and the human cost fallout is predicted to be huge by several renowned economists. Post demonetization, GDP grown projections for FY 2017 has slipped to as low as 3.5 %. Industrial production has slumped as major industries have started laying off employees and reducing the number of‘ work shifts. Job growth has come down and business houses have put their requirements on hold. The agricultural sector has been the worst hit and the daily wage earners are migrating back to their villages for want of cash and work.
The informal sector accounts for 40% of India’s GDP which incidentally provide for almost 80% employment. The informal sector functions primarily on cash transactions. The poorest sections of the society like the daily wage labourer, street vendors, farm labourers are the hardest hit. Unless all of them are enfolded into the formal banking system, the digital or cashless economy is’ practically useless at this point in time.
The revenue secretary stated that the government anticipated the entire money in circulation in the form of demonetized Rs 500 and Rs 1000 to come back to the banking system to trace transactions and tax black money.
Out of the demonetized currency notes of a total value of Rs 14.17 lakh crore at the end of march 2016, an estimated Rs 11.55 lakh crore has been deposited in the banks so far. The Center for Monitoring the Indian Economy (CMIE), an economic forecasting agency has pegged the cost of demonetization for 50 days at Rs 128 lakh crore which includes loss of business or sales, the cost to households, expenses from printing fresh currency notes to the government and the RBI besides for banks.
MLA J R Lobo, Chief Whip Ivan D’Souza, Ibrahim Kodijal, P V Mohan, Sashidhar Hegde, Mamatha Gatti and others were also present.