West Bengal chief minister Mamata Banerjee has been opposing demonetisation tooth and nail. She has visited different states opposing the move and has also taken some Opposition parties along with her. But what has been the outcome of this move? Has it really put the government under pressure? Former railway minister Mukul Roy and currently the vice-president of All India Trinamool Congress, who has been instrumental in organising protest rallies across various states, talks to Indronil Roychowdhury on the issue. Excerpts:
Your party has been opposing demonetisation tooth and nail. You have been demanding an absolute rollback but the government paid no attention to your demand. Don’t you think your movement against demonetisation has been a failure?
In no way you can call it a failure. We have been demanding an absolute rollback but it was a clear case of Prime Minister Narendra Modi’s ego. He won’t come back from a decision he has taken. Our leader Mamata Banerjee clearly stated that the PM should not have been such an egoist with it. If our leader had done such a mistake she would have rolled back her decision. But our PM is not that broad minded. He is trying to conceal his failures by making changes in the rules every day. So far, he has made 126 changes and from the backdoor he has conceded to our ideas because he felt the pinch of cascading effect on the economy.
The government claims that the economy will gain in the long run even though there are short-term losses. What do you have to say about it?
I am not an economist but as far as my common sense goes the short-term losses are huge while the long-term losses are built upon short terms. You build your future standing on the present. The Centre for Monitoring Indian Economy in its report clearly mentioned that the demonetisation exercise would mean a loss to the economy of R1.5 lakh crore, while the gain would be to the tune of R80,000 crore. There was more than R17 lakh crore in circulation, which was 14% of our GDP and the government decided to suddenly withdraw 86% of the circulation or more than R14 lakh crore from the system to curb black money and counterfeit currency. The Modi government initially expected that this measure would wipe out R6 lakh crore worth of black money from the system but the Reserve Bank of India says that nearly R13 lakh crore worth of money has already been deposited with the banks. So the black money has not been recovered and the whole purpose of the exercise fails. The Central Board of Direct Taxes (CBDT) in its 2012 report clearly mentioned that demonetisation won’t be a solution for tackling black money. Black money is largely held in the form of benami properties, bullion and jewellery. Data from income tax probes show black money holders keep only 6% or less of their ill-gotten wealth as cash, hence targeting this cash won’t be a successful strategy. Instead, I see that random raids have recovered some black money and that too cash hoarded in new currency. So, it has been proved that demonetisation didn’t have any positive effect. It has brought immense suffering to the common people and has given birth to new forms of black cash.
Digitisation has been followed by demonetisation. Don’t you see a gain in it?
Digitisation has been taken up as a means to cover up the ill effects of demonetisation. I find no link between demonetisation and digitisation. Digitisation could have been pursued without demonetisation. You only frame relevant rules and enforce proper regulation into your system, you gradually move toward digitisation and a less-cash economy. You need planning, you need preparation and you need to give time to stabilise a system. You can’t expect something like digitisation to happen overnight and everyone starting to use plastic money. More than 90% of our country’s retail trade is in unorganised sector and transactions happen in cash. Is it possible to convert the entire procedure of transaction at one go. I suppose even big companies like the ITC depend much on cash transaction for their cigarette business. A government should keep in mind the people living in the margins of poverty before making any policy. Instead of keeping the entire population in mind the government is working only for a particular section of people — the business class. While digitisation will touch only a particular section of people and will take a long time to reach the last mile man, demonetisation has adversely touched one and all at one go.
While the political class is vocal about it, the business and corporate class seems to have started living with demonetisation and digitisation.
When you talk of the corporate class, you only talk of a small part of the entire population which barely comes to any percentage. But they are important in our financial system because the trickle down effect in our economy happens through them. They try to deal with the government’s policy and get adapted to them. When you talk of the business class, most of them are suffering. If I only say of the truck owners, they are such badly hit that 50% of the trucks have moved off the road. They are the lifeline of our economy bridging the gap between demand and supply. In fact, our supply line has been severely affected and there is spike in prices of essential commodities. The demand-supply situation is in the midst of severe complexity and stock in trade has been affected. Under the general rules of economy, more the people’s purchasing power, more the generation of economy. But Modiji’s government has just reversed the theory. It has snatched away people’s purchasing power making everyone cashless and then talking of a cashless economy. He talked of making a paperless government. How far has he been able to make his government paperless?
What do you think could have been the best means of curbing black money?
In the first case, demonetisation has not curbed black money and it is a failed measure. At least six nations other than India, namely Ghana, Nigeria, Myanmar, Soviet Union, North Korea and Zimbabwe, have tried it out to fight black money, corruption and money laundering. But none could record success. If the government was serious about curbing black money, it should have initiated discussions with all political parties and relevant stakeholders and formulated policies for it. While the Modi government wanted to maintain secrecy, it made a lot of noise on the issue. Silent measures, taking a number of stakeholders in confidence, would have been beneficial.
Mamata Banerjee held meetings in various states on the issue of demonetisation and has got major parties like the Samajwadi Party, RJD, AAP and others along with her. Do you expect to get political dividend from this move?
We didn’t oppose demonetisation for political gains. Mamata Banerjee always looks at the interest of people and her efforts against demonetisation have been purely directed towards people’s interest.