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.
During a discussion session on demonetization, themed 'The colour of money' organised by SREI, former Union finance minister P Chidambaram said the decision was taken without any discussion with anyone. "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 Prime Minister Narendra Modi chose to consult someone," he said.
He said that the RBI had acted as a puppet of the PM by reversing the sequence stipulated in the Act, instead of 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 but it isn't known if there was a written notice, how many people attended the meet, if there was an agenda, or how long the meeting lasted. "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 recommendations were made to the government because the cabinet was waiting for it. How did the cabinet know that the RBI would recommended that the legal tender status should be withdrawn? It was a command performance," Chidambaram said. Asked if he would have liked to be the Union Finance Minister under PM 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.
Talking about the forthcoming budget he said that the correct step at present would be to cut indirect taxes. "You must cut service tax, excise duty, customs. Any tax cut will benefit millions of people and will stimulate the economy. A direct tax cut will benefit only a very small number, no more than 27 lakhs to 50 lakh. If I was finance minister today, I would have cut indirect taxes. Keep corporate taxes, direct taxes, not change the tax slabs for the present to alleviate the suffering and misery of the masses of this country," he said.
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 "P Chidambaram")
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