Terming the Modi government as the world’s “most anti-intellectual” for questioning experts on GDP figures, former Finance Minister P Chidambaram today said the economy will take 12-18 months to recover from the “devastating” impact of demonetisation. “It (the government) even thinks that Amartya Sen, professor at Harvard is undeserving of any respect. It thinks that Oxford, Cambridge, Harvard are all useless,” he said.
Speaking at a seminar on “Untold Stories of Demonetisation – Its impact on Indian Economy”, organised by AICC, the senior Congress leader was critical of the government’s criticism of noted economists like Nobel laureate Amartya Sen for questioning government’s growth data post- demonetisation.
“We have the most anti-intellectual government in the world,” he said.
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Citing government data, he said going by the Gross Value Addition (GVA) figures it is clear that the economy has slowed down and the Q4 data of national income will further confirm that the economy has been hit “very very badly” by note ban.
“It is clear from government’s GVA data that the economy is in a clear declining trend… It is important that we understand that the devastating effect of demonetisation has interrupted India’s economy story. It was an unnecessary interruption.
“To recover from this interruption, in my assessment, it will take between 12 and 18 months to recover. So you will see this impact into 2017-18 and may be right up to the end of 2017-18,” Chidamabaram said.
He said demonetisation was done not on recommendation of the Reserve Bank of India to the government but on the “diktat” of Government of India to RBI.
“Every procedure and every norm was violated in taking this decision and announcing it,” he said.
He also said that the objectives behind demonetisation like curbing black money, corruption and counterfeit currency, have not been achieved and the move has been a failure.
Chidambaram also said the “dazzle” of GDP data, released by Central Statistics Office (CSO), cannot hide the fact that crores of people were affected due to demonetisation.
He said 25 crore people who are daily wagers in informal sector, 15 crore people who are daily income earners like rickshaw-pullers, besides workers in small industries were “most gravely affected”.
It is clear for anyone that the economy has “slowed down” even before the full impact of demonetisation and the Q4 data will show that this has deepened further, he said.
Another senior Congress leader Kapil Sibal alleged that the note ban decision was a “big scam” and demanded that there should be a national-level probe into it and suggested a Joint Parliamentary Committee investigation.
“This is a conspiracy and the biggest scam… If anybody has made money in all this, it is the BJP. One day this will come out and there should be a complete probe by JPC,”he said.
Questioning the GDP data released by the government, he said “all this data is being given out for polls in Uttar Pradesh” and said the CSO has not captured rural data.
Noting that the RBI and the CSO were two institutions on which people had full faith and confidence, he said, “today people have started being skeptical of RBI and CSO. This has happened if you don’t present full facts before public.”
He alleged that BJP is the “richest party” and it benefited the most from the note ban decision, which will come to light some day.
Former Planning Commission deputy chairman Montek Singh Ahluwalia also felt that the effect of demonetisation will be felt in the coming quarters.
“There seems to be a deceleration in growth. The effect of demonetisation is in the informal sector and not on the formal sector including the government,” he said, adding the revised estimates of Q-3 will show bigger decline in growth.
Ahluwalia also said that “we need to improve our data system and CSO has to know what the rural data too and it would have been better to delay the announcement of such numbers.
He asked the government to share as to what are short- term pains of demonetisation and what are its long-term benefits.
Singh said that apart from loss of GDP, the note ban move has also caused a lot of inconvenience and it cannot be measured. He said however that implementation of GST will be better for the economy.