P Chidambram: Demonetisation is biggest scam of the year, must be investigated

Former finance minister P Chidambram demanded a special investigation team to probe the arrests involving huge amounts of new currency notes while adressing the press on Tuesday. The senior Congress leader also hit out at the Narendra Modi government saying that the move has broken the back of the people and will have long-term effects on the Indian economy.

Referring to the recent arrests were the authorities found people with lakhs of new notes, the former finance minister called demonetisation the "biggest scam of the year and that it must be investigated".

"Demonetisation is the worst attack on the poor. The Prime Minister should go out and see for himself the real picture before ATMs. People are angry, but they have no choice but to stand in queues," he said, adding that demonetisation has affected the livelihood of 45 crore people in the country who depend on daily wages.

 P Chidambram: Demonetisation is biggest scam of the year, must be investigated

Senior Congress leader P Chidambram. AP

The congress MP also questioned the government's decision to keep District Cooperative Central Banks out of the move. "Because of this, the farmers are suffering, there is no money to buy seeds, to hire labour or buy fertilisers. There's no money even to buy supplies," he said.

The Narendra Modi government had demonetised old notes of Rs 500 and Rs 1,000 in a televised announcement on 8 November in order to curb down black money, corruption, fake currency and terror financing. The announcement has led to a cash crunch in the country.

Chidambram also said that the government has been shifting the goal of the move. "First it was black money. They have now found a new goal called cashless economy. But you can't go from 3 percent cashless to 100 percent cashless in a month. Where are the machines? Where is electricity?" he said.

Terming demonetisation as a case of "khoda pahad nikli chuhiya", the senior Congress leader alleged that unlike what the government claims, "the move has actually helped bring more black money into the system".

Answering a question on whether the reduction in interest rates will help the economy, Chidambram said while in a normal economy interest rate going down is good, but it's not the same for India.

"This is not a normal situation. India is going through a very bad period of tepid growth. Credit growth is lowest in 20 years. The aggregate demand is low; demonetisation has made it even lower. There's no green investment either. These are the numbers that are relevant. Any government must look at these figures."

As for inflation, he said that low demand has helped control inflation but the economy won't surive a long period of low demand. "If there's no demand, it will affect production. Some factories have already started laying off people," he said.

The senior Congress leader also attacked the government and it claims that the situation will normalise post 30 December. "The government has withdrawn 23,000 crore notes from the market. To print that many notes, it will need at least seven months time," he said, adding that the cash crunch will continue.

Chidambram also asked the Reserve Bank of India to release the minutes of the meeting that took place before the 8 November announcement of the move by Prime Minister Modi, saying that it would give the nation a clear idea as to who said what about the move.

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Updated Date: Dec 13, 2016 14:00:44 IST