The demonetisation of higher denomination currency notes has unsettled the economy, which was “humming at over 7 % growth rate till then,” and it will take at least next two financial years for it to recover from the impact, former Union finance minister P. Chidambaram said.
The impact of the most ill-conceived decision taken by Prime Minister Narendra Modi was such that it was likely to bring down the GDP growth rate by 1% to 1.5% from the 7.5% estimated by the Centre before the announcement of demonetisation, Mr. Chidambaram said here on Sunday. “The decision with horrendous consequences is likely to limit the GDP growth rate to 6% to 6.5% during 2017-18 and 2018-19,” he estimated.
Even if it would come down by 1% it would mean a loss of ₹1.5 lakh crore monetarily, Mr. Chidambaram said while delivering the foundation day lecture organised on the occasion of the second anniversary of ‘Mana Telangana’, a Telugu daily newspaper here. Besides, putting people to all sorts of hardships it would also mean impacting investment, employment generation and wealth creation, he noted.
Stating that the content of demonetisation was debated widely already, Mr. Chidambaram, who is second only to late Morarji Desai in presenting 10 full budgets of the country, remarked that the process leading to it was still in dark for the majority. The process followed by keeping in dark the Union Cabinet and the RBI was a challenge to the democratic systems established in the country, he felt.
Subversion of process
He stated that none of the objectives of ending corruption, unearthing black money, weeding out fake currency and stopping terror funding, as listed out by the Prime Minister, were achieved with demonetisation. “Nobody has objections with the objectives but there are serious reservations about the subversion of the processes,” Mr. Chidambaram said and asked the people to be vigilant against such acts.
The immediate impact of demonetisation, however, was rendering 15 crore people such as farm workers and labourers in other activities depending on daily wages and 30 crore people such as fruit-sellers and carpenters depending on daily income lose livelihood for 40 to 50 days. But, there was no word from the government so far on compensating them, the Congress leader lamented.
Cashless not possible
Further, it had also crashed the prices of farm produce and closed small and medium enterprises which provide maximum employment. Mr. Chidambaram also faulted the drive for cashless economy stating that it was not done in any of the major economies across the world and countries such as USA, UK, Germany and Canada have transactions in cash from 46% to 80%.