Demonetisation a monumental blunder, failed to achieve objectives: Cong

On the seventh anniversary of the BJP-led Centre’s demonetization decision, the Congress on Wednesday said it failed to achieve the objectives as it was a “monumental blunder” of the Modi government and has blood on its hands for a reckless decision.

In a statement, Congress General Secretary Jairam Ramesh said, “Seven years ago today, on November 8, 2016, Prime Minister Narendra Modi inflicted demonetisation on an unsuspecting nation. A decision that broke the back of the Indian economy and epitomised the unique combination of hubris, inhumanity and economic illiteracy that is the hallmark of the Modi government.”

He said that a travesty repeated again with the unplanned, sudden lockdown on March 24, 2020, which led to lakhs of migrant workers walking hundreds and thousands of kms back home.

“Who can forget the Prime Minister mocking people’s suffering, laughing and saying ‘ghar mein shadi hai, paisa nahi hai’? Who can forget the hundreds of poor and middle-class people who died waiting in long lines to convert their notes, even as the wealthy managed to exchange their banknotes with ease?” he asked.

He said that demonetisation along with a badly designed and hurriedly rushed through GST (goods and services tax) finished off India’s job-generating small and medium businesses, caused a 45-year unemployment high, and ended the economic recovery that had begun in 2013, all while failing to achieve any of its stated objectives.

“It led to a record concentration of wealth and power, particularly among a handful of large monopolies that have sustained the BJP financially even as the people continue to grapple with joblessness and price rise caused by the same monopolization,” he said.

The Congress leader also cited the failures and said that due to demonetisation, GDP growth momentum created from 2011 onwards was completely reversed. “India’s GDP growth rate increased steadily from 5.2 per cent in 2011 to 8.3 per cent in 2016. Then, the demonetisation disaster hit, and growth started to slow, all the way to 4 per cent just before the COVID-19 pandemic,” he stated.

He further stated that the economic damage of demonetisation is obvious, no matter what data you look at, as an IMF report from August 2018 said there was a “severe and long-lasting” impact on growth, with a “disproportionate impact on the informal sector”, a study from Brown University found that demonetisation led to a large drop in consumption, forcing poorer households to go into debt.

He also said that demonetization failed to achieve its objectives as it was a “monumental blunder”.

He said that it failed to achieve any of the shifting goalposts that the Modi government had proposed as objectives -- whether reducing the spread of black money, ending counterfeiting or making India cashless.

Citing the figures, Ramesh said, “Almost 99.3 per cent of the demonetised notes were returned to the RBI making it a complete and total failure of exposing any black money. Only 0.0002 per cent of demonetised currency was found to be counterfeit. Consumer confidence, measured by the RBI survey, turned from positive to negative due to demonetisation.”

He also said that it had no effect on making India a ‘cashless economy’.

“In fact, as of March 2023, the cash in circulation was 12.7 per cent of GDP, higher than the 12.1 per cent in the year before demonetisation. While it is true that UPI transactions have increased especially for smaller transactions, but that does not indicate a decrease in cash in circulation,” he said.

He also said that in May 2023, the Rs 2,000 note was withdrawn by the RBI. “Ironically, this note was withdrawn due to it being faked and counterfeited in high numbers,” the Congress leader alleged.

Ramesh, who is also a Rajya Sabha member, further said that demonetisation was carried out with haste, incompetence, and with a total and complete disregard to expert advice from the RBI as the bank’s Central Board put on record objections to demonetisation, stating that black money is mostly held in gold or real estate and not in cash.

“The Modi government, believing it knew best, overrode the RBI’s experts to push through this disaster,” he said.

He also said that most tragically, over 100 people died in queues and stampedes, trying to access their own money.

“In addition to devastating the economy and concentrating wealth in the hands of a few people, the Modi government has blood on its hands for a reckless demonetisation. India will not forgive the Prime Minister for this monumental disaster,” the Congress leader added.