One year of demonetisation: Centre stands firm as Opposition gears up for 'Black Day'

New Delhi: The Centre on Tuesday stood firm on its much-criticised decision to ban old currency notes of high denomination even as the Congress-led Opposition geared up for the ''Black Day'' protest on Wednesday – the first anniversary of the demonetisation.

On Tuesday, the Opposition and the government exchanged verbal blows over the action with former Prime Minister Manmohan Singh calling it ''disastrous'' while Finance Minister Arun Jaitley rejected the charge, saying there was an ethical and moral rationale behind the decision which had given a "new direction" to the economy.

Jaitley, however, acknowledged that the "benefits may not be immediately visible" but would make future generations proud.

Fielded by the party in poll-bound Gujarat, Manmohan Singh said the demonetisation measure had failed its ostensible purpose of curbing wealth accumulated through tax evasion as it was known by now that none of the stated objectives of eliminating black money, terror financing and counterfeit currency have been met.

"The fact that more more than 99 percent of the (spiked) currency came back into the banking system has punctured the government's claim. There are also widespread reports of the rich converting their black money into white while the poor have undergone immense suffering," he said, "invoking the memory of more than a hundred people who lost their lives last year in the wake of the demonetisation".

Calling the withdrawing of 86 percent of legal tender in one single stroke as ''undemocratic'' and a ''coercive'' move, the former Prime Minister said "the demonetisation was clearly not the solution" to end the menace of black money and tax evasion in India.

"Demonetisation has proved to be a mere bluster to reap political dividends while the real offenders have escaped," he said, again calling it "an organised loot and legalised plunder".

He said while the demonetisation had reduced economic growth to 5.7 percent, it was still "bound to be a gross underestimate as the pain of the informal sector is not adequately captured in the calculation of the GDP".

What was even more tragic, he said, is the fact that none of the lessons from this "monumental blunder" has been learnt by Prime Minister Narendra Modi. 

"Instead of providing relief to the poor and the marginalized farmers, traders and small and medium businesses, the government chose to inflict on them a badly designed and hastily implemented GST,'' he added.

Manmohan Singh said if anyone had benefited from the "twin blow -- a complete disaster for our economy" it was China whose imports to India have grown by a whopping 23 percent in just one year.

He questioned the rationale behind the anti-nationalistic slur thrown on those who criticize Modi and the NDA government. 

"This attitude of suspecting everyone to be a thief or anti-national, the low-level rhetoric is damaging to democratic discourse and has real consequences for how we relate to one another as citizens. Political leaders must stick to the high end," he said.

Hours after the former Prime Minister's speech, Finance Minister Jaitley strongly defended the economic reforms calling note ban a "watershed moment in the history of the Indian economy".

"The next generation will view the post November 2016 national economic development with a great sense of pride as it has provided them a fair and honest system to live in," he said in his Facebook post.

The Finance Minister said one of the important objectives of demonetisation was "to make India a less-cash economy and thereby reduce the flow of black money in the system".

While Prime Minister Modi did not mention about the aim to reduce cash transactions in his November 8 speech last year, the government, however, later said the note ban was also aimed at to make India a less-cash economy. 

Jaitley took a dig at Manmohan Singh, saying "anti-black money drive is (an) ethical drive, a moral step and what is morally and ethically correct has to be politically correct".

He said the BJP believed that economic status quo needed to be shaken up to end corruption. "Less cash in the system may not end corruption but makes corruption difficult," he said, claiming terror funding had been "squeezed" after demonetisation.

"Demonetisation is not a one-stop solution to end corruption. It cannot be, but it did change the agenda. And that changed agenda is that we should go towards less-cash economy. Individual tax payers' number has increased, digital transactions have gone up and terror funding has squeezed," Jaitley elaborated.

The central government also came under a sharp attack from West Bengal Chief Minister Mamata Banerjee who changed the display picture of her Twitter account to black in a protest against note ban. She has instructed Trinamool Congress workers to observe "Black Day" to mark its first anniversary.

"Demonetisation is a big scam. I repeat, demonetisation is a big scam. If a thorough investigation is conducted, this will be proved," Banerjee said.

She said demonetisation was not to combat black money but was aimed at to "convert black money into white money for vested interests of the political party in power".

In a harsh criticism of the move, she branded it as a "devil act" and said the Indian economy has been "ruined".

With IANS inputs