Chidambaram Feels People Have More Cash Today Than Prior To Demonetisation

Backing Congress President Rahul Gandhi’s assertion that demonetisation was the biggest scam in India, former Finance Minister P. Chidambaram on Friday said that people have more cash in hand today than prior to demonetisation.

“Today, the cash with public is equal or more than the cash (they had) prior to November 8, 2016. The cash in the hands of people is a good 1.4 per cent more than what it was on November 8, 2016. Of the total 11 per cent household savings, 2 .8 per cent is in cash. So why are people holding cash?” Chidambaram said in an interview to ANI. The former Finance Minister further said: “Correspondingly, there is less public cash in the banks which means people have less confidence in putting cash in the bank and are more comfortable keeping cash in their homes.” He added that there is serious suspicion or charge on government that the entire demonetisation exercise was designed to convert black money into white.

“The government claimed 3 to 4 lakh crore will not return to the Reserve Bank of India (RBI) and that will be black money stock that would be seized and would be a gain to the government and the RBI. If all that came back to the RBI, then logical conclusion is that 3 to 4 lakh crore is converted into white,” Chidambaram said. “There is a genuine suspicion, in fact, it is a charge now, that the Centre devised this entire demonetisation exercise to enable people with large holding of black money to convert it into white,” he added.

Chidambaram slammed Finance Minister Arun Jaitley, who defended demonetisation after the RBI report was out. Jaitley had said that the purpose of demonetisation was also to formalise the economy and make it more tax compliant. “I am not impressed what Finance Minister Jaitley says today, 21 months after demonetisation. In fact, many of us think he was not even taken into confidence when demonetisation was announced,” Chidambaram said.

“We are going by what the Prime Minister said in his TV broadcast on November 8, 2016. He set out three objectives for demonetisation – black money, stopping terror financing and putting an end to counterfeit currency. So, why should I consider any other objectives other than those announced by the Prime Minister,” Chidambaram said. He also dismissed arguments that demonetisation helped in money trail and slashing cash transactions.

“People are inventing reasons post facto as if money trail is the only purpose for which they did demonetisation. You would have captured the money trail without demonetisation, for example, I introduced banking cash transaction. Anybody who deposits large amount of cash or anybody withdraws large (amount of) cash will leave a trail and that trail was taxed at minimal rate. Why do you have to put thousands and thousands of people to such misery?” he said.

Responding to the Bharatiya Janata Party’s (BJP) allegations that the Gandhi family had stashed black money which became obsolete following demonetisation and therefore the Congress was crying foul, Chidambaram said: “How are we bothered about demonetisation hitting people with black money? We didn’t have money and we don’t have money. Amount of contributions made to the BJP and the Congress, which has been revealed, will show that the BJP always gets three to four times more contribution than the Congress. If anybody has black money, I don’t know. It must be the BJP. We are not concerned.”

On the falling value of rupee, Chidambaram said: “I don’t want to comment on the exchange rate. It is a complex exercise. It depends on basket of currency; I don’t think it is correct for me to pronounce on exchange rate. All I can say is that there is pressure on fiscal deficit, pressure on current account deficit. The RBI in its report said inflationary pressures are there in the economy. Foreign portfolio investments are pulling out money. All this puts pressure on the rupee.” On rising fuel prices, Chidambaram felt the Centre should bring petroleum products under the Goods and Services Tax (GST). “Why should I suggest anything to this government which anyways won’t listen to what I say? Today, price of crude oil is good 30 per cent below average price of crude when we were in office. Nevertheless, diesel and petrol prices are higher than what they were in May 2014. It is because of the huge taxes imposed by the Central and State governments. The Central Government tax on petrol and diesel is nearly twice the taxation of May 2014,” Chidambaram explained.

He further said: “The Central Government is greedy. It knows you and I can do nothing except grumble and pay the tax. You can grumble, you have no choice. If you have to carry out your daily work, you have to fill fuel. When you fill it, the government makes money. Therefore, the Central Government must immediately switch over to GST.”