A group of prominent citizens has doubted Prime Minister Narendra Modi’s intention to fight black money by demonetizing Rs 1000 and 500 notes, saying, instead of punishing those responsible for Rs 1.14 lakh crore of bad debts, the Government of India has “waived” these over the last 3 years.
“At the same time”, they have said in an open statement, “loans worth lakhs of crores of rupees are still outstanding”, wondering, “Why has the government not made public the names of the beneficiaries of the waiver and the names of the big defaulters, both individuals and corporations?”
Those who have signed the statement include prominent economist Prof Prabhat Patnaik, well-known Supreme Court advocate Prashant Bhushan, top right to information (RTI) activists and Magsaysay award winners Aruna Roy Nikhil Dey, top Dalit rights activist and Magsaysay award winner Bezwada Wilson, and National Alliance of People’s Movement (NAPM) activist Meera Sanghamitra, among others.
Characterizing government intention to fight fake currency as without basis, the statement says, “As per the Indian Statistical Institute, Kolkata, study, done on behalf of the National Investigation Agency (NIA), Rs 400 crore worth of fake currency is in circulation. This is only .028% of Rs 14,180 billion worth currency demonetized in Rs 500 and Rs 1000 notes.”
The statement says, “IT raids have found that only 5-6% of black money is kept in hard cash”, while the rest is converted into “bullion, gold jewellery, real estate and foreign currencies through brokers and middle-men”, adding, “In fact, organized middle-men and touts have already emerged to convert black money into white for a commission.”
Pointing out that experts, “including a former RBI Governor and the current chief economist of the World Bank”, have disputed the government move, the statement says, “86% of currency in circulation is in Rs 500 and Rs 1000 notes” and “97% of all transactions by volume are done in cash”.
It underlines, as a result, the “summary demonetization has created chaos all over the country with people unable to purchase daily essentials and, in many cases, life-saving goods and services.”
Pointing towards the death of several persons following demonetization, the statement says, “Only about 30% of the Indian population has access to the banking system as per data compiled by the banking division of the finance ministry. Moreover, the distribution of banks is highly skewed with a third of all bank branches in only 60 Tier 1 and Tier 2 cities/towns.”
“Consequently”, it says, “people in rural India who often also suffer from inadequate information have become the worst victims of demonetization”, adding, worse, “reports have started coming in of digital payment systems unable to keep up with the new volume of transactions with credit and debit card servers also going down.”
“Summary demonetization has shaken this trust and will likely impact India’s economy well beyond the initial and widespread chaos”, the statement notes, adding, “If it is the Government’s case that high value denomination currency is used to hoard black money, then the decision to reissue new Rs 500 and Rs 1000 notes does not make sense. Issuing even higher value Rs 2000 note is completely inexplicable and puzzling.”
The statement warns, “The summary way demonetization has been effected is leading to a riot like situation in the country”, demanding rollback or suspension of demonetization “to enable the common person to make adequate arrangements for daily needs and for more orderly phasing out of the old notes.”