Former Prime Minister Manmohan Singh said he was stunned when he heard the note-ban announcement and wondered who had advised Prime Minister Modi to inflict such a reckless step on the nation.
Addressing an election rally in Gujarat on Tuesday, Singh said November 8 was a ‘Black Day’ for India’s economy and democracy. “What is even more tragic is that none of the lessons from this monumental blunder have been learnt by the government.”
He said black money and tax evasion are a menace but demonetisation was not the solution. “It has been suggested many times in the past as one of the methods to eradicate black money. But as a responsible government, we never took such a drastic measure because in our reasoned analysis, the costs of demonetisation always exceeded the benefits substantially,” Singh revealed.
He said to promote a less-cash economy, coercive steps are ineffective. “Cash in circulation after one year is close to 90 per cent of previous levels. The fact that more than 99 per cent of the demonetised currency came back into the system, has punctured the government’s claims.
He added that the “twin blows” of demonetisation and GST damaged the MSME sector and businesses had to turn to Chinese imports, which had shot up 23 per cent in just one year at the cost of Indian jobs. “The pain of the informal sector is inadequately captured in the GDP calculations, as the 5.7 per cent under the new calculation is bound to be a gross underestimate.”
The former PM also said Modi’s pet Bullet-Train project was an exercise in vanity. “₹88,000 crore through a soft loan may seem like easy money, but it still needs to be repaid. Gujarati entrepreneurs know very well that if a deal is too good to be true, it probably is not,” he said. The Centre should instead have focussed on strengthening the existing passenger rail network, Singh said.