Economy won't grow at more than 6 to 6.5% for next two fiscals: Chidambaram

Terming the demonetization as "ill-conceived", former Finance Minister P Chidambaram on Sunday said the economy won't grow at more than 6 to 6.5% for the next two fiscals due to the damage caused by the move. Former RBI Governor Raghuram Rajan had categorically rejected the idea of demonetization, he claimed, adding that NDA government "must have consulted some RSS pracharak" before taking the decision.

Speaking at the second anniversary function of Telugu daily 'Mana Telangana' in Mumbai, Chidambaram said the economy will suffer a setback of Rs 1.5 lakh crore as 80% of the Small and Medium Enterprises had closed down. "If 10% of bank officers were dishonest earlier, thanks to demonetization, 50% of the bank officers became dishonest. So the very exercise generated more corruption, not less corruption. So they changed the narration to cashless economy now," he said. "...you take it from me, the economy will not grow at more than 6 and 6.5% in 2017-18 and 2018-19. It will take two years for the economy to recover. People have lost confidence in currency. People are not spending. "You have unnecessarily interrupted the economic story of this country by this thoughtless, ill-conceived demonetization," Chidambaram said.

Earlier, addressing a meeting of Telangana Pradesh Congress Committee, the senior Congress leader said those who should have been consulted were not consulted before taking the decision. "The finance secretary was not consulted, the banking secretary was not consulted and the Chief Economic Adviser was not consulted, and then who was consulted? They must have consulted some RSS pracharak," he alleged. Several past RBI governors had disapproved of the idea, he said.

"We had Raghuram Rajan as Governor for three years, he did not think demonetization was the answer and he categorically told the Government no, don't do demonetization. Then a new Governor comes and in 64 days he agrees for demonetization." As much as 2,400 crore notes of Rs 500 and Rs 1,000, worth Rs 15.44 lakh crore, were rendered invalid, and with the capacity of all four printing facilities if they operated round-the-clock being 300 crore pieces a month, to replace all 2,400 crore notes, it will take eight months, he said.

At the end of three months post-demonetization, half of the ATMs were not working and "most ATMs don't have currency," Chidambaram alleged, adding that everyday 11 crore people were standing in queues for hours to withdraw their own money. As to government's aim of having a 100% cashless economy, he said 80% of transactions in Germany and Austria still take place in cash, 60% in Australia, 56% in Canada and 46% in the US.

"History books will record along with Zimbabwe, North Korea, Libya...India demonetised its currency...It is a shame...May be this government thought these are the most prosperous countries in the world," he added. "First they talked about demonetization and now they are saying remonetisation. Of the Rs 15.44 lakh crore worth of money demonetised every rupee has come back to RBI. Now you are remonetising....this is not 'notebandi' but 'notebadli'," Chidambaram said. He said would have resigned as Finance Minister had the Prime Minister of the day insisted on demonetization. "They (Government) said this is to put an end to corruption. I looked at the new notes, has it been written (on them) not valid for bribe giving?" Chidambaram quipped. "We delivered 7.5% average growth over 10 years (during UPA rule). Here they (NDA) have impacted India's growth," the former finance minister said.