Former railway minister Mukul Roy and at present the vice president of All India Trinamool Congress, who has been instrumental in organizing protest rallies across various states, talks to Financial Express' Indronil Roychowdhury.
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 forces along with her. But what has been the outcome of this opposition? Has it really put the government under pressure? Former railway minister Mukul Roy and at present the vice president of All India Trinamool Congress, who has been instrumental in organizing protest rallies across various states, talks to Financial Express’ Indronil Roychowdhury on the issue. Excerpts:
1. Your party has been opposing demonetization tooth and nail and now it is 44 days that we are into it. You have been demanding an absolute roll back but the government has given deaf ears to your demand. Don’t you think your movement against demonetization has been a failure?
Ans: In no way you can call it a failure. We have been demanding an absolute roll back 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 Prime Minister should not have been so egoist with it. Had she done such a mistake she would have rolled back her decision. But our Prime Minister 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 back door he has conceded to our ideas because he felt the pinch of cascading effect on the economy.
2. 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?
Ans: I am not an economist but as far as my common sense goes the short term losses are huge while the long terms 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 demonetization exercise would only mean a loss to the economy of Rs 1.5 lakh crore, while the gain would be to the tune of Rs 80,000 crore. There was more than Rs 17 lakh crore in circulation, which was 14% of our GDP and the government decided to suddenly withdraw 86% of the circulation or more than 14 lakh crore from the system to curb black money and counterfeit currency. The Modi government initially expected that this measure would wipe out Rs 6 lakh crore worth of black money from the system but the Reserve Bank of India says that nearly Rs 13 lakh crore worth of money have 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 demonetization 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 demonetization 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.
3. Digitization has been followed by demonetization. Don’t you see a gain in it?
Ans: Digitization has been taken up as a means to cover up the ill effects of demonetization. I find no link between demonetization and digitization. Digitization could have been pursued without demonetization. You only frame relevant rules and enforce proper regulation into your system, you gradually move toward digitization and a less cash economy. You need planning, you need preparation and you need to give time to stabilize a system. You can’t expect something like digitization to happen overnight and everyone starting to use plastic money. More than 90% of our country’s retail trade is in unorganized 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 digitization will touch only a particular section of people and will take a long time to reach the last mile man, demonetization has adversely touched one and all at one go.
4. While the political class is vocal with it, the business and corporate class seems to have started living with demonetization and digitization.
Ans: 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 trickledown effect in our economy happens through them. They try to zeal 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 life line 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?
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5. What do you think could have been the best means of curbing black money?
Ans: In the first case, demonetization 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 out with it to fight black money, corruption and money laundering. But none could record a history of success. If the government was serious about curbing black money, it should have initiated discussions with all political parties and relevant stake holders 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 stake holders in confidence would have been beneficial.
6. Mamata Banerjee held meetings in various states on the issue of demonetization and have got major parties like the Samajwadi Party, RJD, AAP and others along with her. Do you expect to get political dividend from this move?
Ans: We didn’t oppose demonetization for political gains. Mamata Banerjee always looks at the interest of people and her efforts against demonetization have been purely directed towards people’s interest.