The otherwise reclusive former Prime Minsiter Dr. Manmohan Singh tore into his successor Narendra Modi for not learning any lessons from the monumental blunder of demonetisation. Invoking the memory of those who lost their lives in the wake of the note ban announced on 8 November, 2016, Singh said that instead of learning from the demonetisation disaster, Prime Minister Modi inflicted India’s poor with a “badly designed and hastily implemented” Goods and Services Tax (GST).
Speaking at an interactive session with traders in Ahmedabad, Singh said, “Tomorrow will mark exactly one year since the disastrous policy of demonetisation was thrust on the people of our country. I say it with immense pain and a sense of deep responsibility that 8 November was a black day for our economy and indeed for our democracy.”
Referring to the note ban exercise as “organised loot and legalised plunder”, the former prime minister went on to add how shocked he was after hearing the announcement and wondered who advised Modi to inflict such reckless step. An eminent economist, Singh pointed that similar suggestion have been made in the past to eradicate black money and tax evasions and how he never took such a drastic measure because the cost of demonetisation exceeded the benefits substantially.
Dwelling on it further, the two-term prime minister explained how none of the stated objectives of eliminating black money, terror-financing and counterfeit currency, have been met. He said, “To promote a less cash economy, coercive steps like demonetisation are ineffective. The cash in circulation after one year is close to 90% of the previous levels. The fact that more than 99% of the demonetised currency came back into the banking system has punctured the government’s claims,” said Singh.
Ever since the Modi government announced the note ban decision, Singh has been a vocal critic of this particular policy decision and had even predicted how it would lead to India’s GDP rate dropping by 2 per cent. Despite the rebuttal from the ruling dispensation, Singh’s words turned prophetic and India’s GDP growth fell from 7.9% to 5.7%.
Coming down hard on yet another policy decision of Modi government, Singh maintained how the twin blows of note ban and GST have damaged India’s economy. Singh labelled the current GST as a “complicated mess” and a “nightmare” for small and medium businesses. He pointed out: “Along with demonetisation, GST has sown a deep rooted fear of tax terrorism amongst the business community. At a time when the economy has slowed down considerably despite favourable global macro-economic conditions, the fear of tax terrorism has eroded the confidence of Indian business to invest.”
Moreover, he pointed how these twin decisions have led to growth in private investment hitting a 25 year low. “This is terrible for the growth of India’s economy. Good governance involves both the head and the heart and it pains me to say that the Union government has completely failed to do its duty on both fronts,” Singh told the audience in Ahmedabad.
Fielding Singh in Gujarat just a day before the one year anniversary of the note ban exercise was a masterstroke by the grand old party, considering Congress vice president Rahul Gandhi’s continued offensive against GST and demonetisation has hit the right chord with Gujaratis, whose business have suffered immensely because of central government’s policies.
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. During his 30-minute long speech, Singh devoted a large part of it to Gujarat repeatedly pointing how Gujaratis have been the worst affected.
“This twin blow is a complete disaster for our economy. It has broken the back of Small and Medium Enterprises (SMEs) in the textile hub of Surat alone where 60,000 looms have been discarded since July. At the rate of 35 job losses for every 100 looms shut, an estimate of 21000 jobs have been lost in just one year in one industrial sector in Surat. The impact of in the rest of the country is equally bad if not worse,” Singh claimed.
He further cited examples of ceramic sector and industry sectors in various parts of Gujarat and how the domestic sector’s inability to meet with demand has led to increasing import from China. “In the first half of fiscal year 2016-17, India’s import from China stood at Rs 1.96 lakh crore. During the same period in fiscal 2017-18, the imports from China increased to Rs 2.41 lakh crores,” he said.
Singh mentioned how this unprecedented increase of imports by more than Rs 45,000 crores, which is a 23% increase in a year, can be attributed largely to demonetisation and the GST. “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.”
Accusing Modi of not having his priorities right, the former prime minister cited example of the Mumbai-Ahmedabad bullet train and called it an “exercise of vanity”. He mentioned that the bullet train project will neither benefit five crore Gujaratis nor the nation as a whole.
Citing the increasing number of deaths due to derailment, Singh questioned whether the prime minister considered the alternative of high speed rail across India by upgrading the existing broad-gauge infrastructure? He further added that whether by questioning the bullet train, does one become anti-development?
“Is everyone who questions the outcome of demonetisation and GST a tax evader? Does questioning the drop of GDP rate make one anti-national? This attitude of suspecting everyone to be a thief or an anti-national, this low level rhetoric is damaging to democratic discourse and as real consequences of how we relate to one another as citizens,” Singh said.
Earlier in an interview to Bloomberg Quint, the former prime minister had called demonetisation a catastrophic economic policy whose impact on weaker sections was far more damaging than revealed by an economic indicator. He stated that the time for politicking was over and the prime minister should graciously acknowledge the blunder and seek support to rebuild the economy.
With only a month left before Gujarat votes to elect its new government, Singh made a strong pitch for the Congress and claimed that the winds of change were blowing in Gujarat and asked the people of the state to yet again repose faith in Congress. “We will ensure that the voice of every Gujarati regardless of caste, creed, gender or class is heard and will be heard,” he concluded.