A Parliamentary committee has slammed the recent demonetisation step of the Centre, saying it not only affected the poor but also the manufacturing sector in the country.
“It was an effort to combat corruption, tax evasion and counterfeiting and eradicate black money. However, the committee realises that inevitably, it is the low-income and rural households who have been the hardest hit by the currency reform. Demonetisation has weighed heavily on the country’s manufacturing sector. Though the ministry took steps to mitigate the effects, it cannot be ignored that it created significant disruption throughout the economy and threatened economic output,” says the report of the committee on subordinate legislation of Rajya Sabha.
The government, while announcing the noteban had said that then Rs 1,000 and Rs 500 would be discontinued as legal tender. The decision was taken to counter flow of black money in the country, it had said. During the time, the government had also announced to make India a cashless economy. It had also issued as many as 74 notifications in first 50 days since the demonetisation announcement was made.
Subsequently, the released GDP data showed little effect on the economy. The committee also felt that tackling black money is a function of immense political will and “legal/administrative/diplomatic heavy lifting”.
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“The committee acknowledges that corruption is a problem but in the process honest, hardworking and tax paying citizens of India were made to suffer. The committee agrees that corruption is a major cause for the persistence of poverty and the growth of corruption in India due to the maze of regulations and the thickets of red tapism. In the committee’s view solution lies in simplification, rationalisation and reduction in taxes… And for efficient implementation of all this, discussion on the issues at hand with people with the requisite expertise is a must rather than attack any criticism as somehow anti-national or pro-corruption,” says the report further.