Demonetization ‘terrible, ill-conceived’ decision, implemented without any discussion: Chidambaram
Former Union Finance Minister P Chidambaram on Saturday said that the decision to implement demonetization was taken without any discussion with anyone. He stated this during demonetization theme based discussion session in Kolkata .
“I think it is a terrible decision, ill-conceived, terribly implemented, with horrendous consequences and I think this would have been foretold by anyone who knows about money and monetary policy if the Prime Minister Narendra Modi chose to consult him,” he said.
Chidambaram added that the Reserve Bank of India (RBI) had acted as the puppet of the Prime Minister because its reversed the sequence stipulated in the Act. Instead of the RBI recommending withdrawal of legal tender status for currency, the government had recommended to the RBI that legal tender status should be taken away.
The RBI board was called on November 7, 2016 and it was not known if there was a written notice, how many people attended the meet, if there was an agenda and how long did the meeting last.
“I have found out that only two of the three independent directors attended. The remaining posts of the independent directors have been vacant for the last two and a half years. The meeting lasted for 30 minutes and then the recommendation is made to the government and the cabinet is waiting for the recommendation.
How did the cabinet know that the RBI would recommended that the legal tender status be withdrawn? It was a command performance and to that extent, on this incident, I think the RBI’s reputation has been put at great risk. No major economy in the world has demonetized its currency over the last 50 years.
The ones that come to mind are illustrious countries like Zimbabwe, North Korea and Libya. Now India’s been added to that list,” he said. Asked if he would have been liked to be the Union finance minister under Prime Minister Modi, he said that he would have resigned on November 8, 2016.
Referring to the initial support that the PM received he said that he was willing to concede that a very large proportion of the people still would like to believe that demonetization would work but everyone, within the next four months would come face to face with reality. “Here are parents, who have children.
Some of these children would want to go to medical colleges and engineering colleges. According to surveys, demonetization has put an end to corruption and black money. Now when you go to medical college for admission, they would ask you for capitation fee. Will they take it by cheque through Paytm or credit card? You will come face to face with reality when admissions open,” Chidambaram added.