'Organised Loot, Legalised Plunder': Dr Manmohan Singh On Notes Ban

New Delhi: Prime Minister Narendra Modi was present in parliament as his scheme to abolish 500 and 1,000-rupee notes was labelled "a monumental management failure" by his predecessor, Dr Manmohan Singh.

"I do not disagree with these objectives," said Dr Singh, whose government was decisively defeated by PM Modi two years ago, referring to PM Modi's declaration of a crackdown on tax evasion and graft. But, he said, the fact that people have limited or no access to the money in their accounts, even if temporarily, amounts to "organised loot and legalised plunder."

Dr Singh, a reputed economist, opened the debate in the Rajya Sabha on demonetisation on behalf of his party, the Congress. He said that while he cannot presume to know "the final outcome," agricultural and economic growth will be dented by the PM's sudden cancellation on November 8 of the high-denomination currency. "The GDP of the country will decline by about 2 per cent by what has been done. And this is an underestimate and not an overestimate," said the Congress leader.

Since the winter session of parliament began last week, the opposition has attacked the government for failing to anticipate the shortage of cash that has eclipsed the country since the notes were cancelled with just a few hours of notice. Opposition leaders have been demanding a statement from the PM, while the government, till today, said Finance Minister Arun Jaitley would present the government's explanation.

The government says that 88 billion dollars of old notes have been deposited in banks since the ban was called, and that new 500 and 2,000-rupee notes are being rushed every day to banks, where the snaking lines of last week have now substantially decreased.

But it is rural India where people have been hit especially hard. With limited or no access to banks and at a time when farmers are sowing their winter crop, the shortage of cash has the potential to turn into a crisis. The government has announced urgent measures to help farmers, like allocating 21,000 cores to state-lender NABARD to dispense as loans. The government has also indicated that while it expects a contraction of growth for a quarter, it is prepping a big investment push as compensation.

In an emotional speech delivered after his announcement, PM Modi had asked for "just 50 days" to complete his crackdown on black money. "The PM has said wait 50 days, it is a short period, but for the poor and deprived, even 50 days can bring about disastrous effects," countered Dr Singh in the Rajya Sabha today. He also said that the frequent changes to the new policy, including revising the amounts that people can withdraw from their accounts or ATMs, "reflects very poorly on the PM's office, the Finance Minister's office and the Reserve Bank of India."

Dr Singh's speech was preceded by sparring between opposition leaders and the Finance Minister, who said that the former PM's comments should be made once the debate was formally initiated.