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Left calls demonetisation a ‘money-laundering exercise’ to protect corporations

LiveMint logoLiveMint 31-08-2017 PTI

New Delhi: Terming demonetisation as a “money-laundering exercise that helped convert black money into white” at the expense of people, the Left on Thursday said the prime minister should come clean on it and accountability must be fixed as the note ban “failed” to achieve its objectives.

“Was this entire exercise done to protect the corporates who are refusing to return the loans they had taken from our nationalized banks? Was this done to prevent the banks from collapsing as a consequence of these loans?” CPI(M) leader Sitaram Yechury asked. While announcing demonetisation on 9 November 2016, Prime Minister Narendra Modi had stated the move will help combat the problems of corruption, black money, terror funding and counterfeit currency.

Yechury claimed that none of these were achieved and instead corruption “has reached hitherto unknown levels”. Another Left party, the CPI, stated that RBI’s annual report for 2016-17, released on Wednesday, raises several questions, given there is no information on quantum of black money unearthed due to demonetisation, and also attributed the falling GDP to the note ban. “M. Venkaiah Naidu, when he was a minister, had said demonetisation has short term pain and long term gains. There is absolutely no gain, only pain in both short and long terms,” Yechury told reporters. Rather, he alleged, it benefited corporates “under the mask of digitization” and at the cost of common people.

He alleged the move also legitimised counterfeit currency. “It has now been completely confirmed that this has been a money laundering exercise to allow black money to be converted into white,” he alleged. “Normally we would demand a white paper. But since this is all about the prime minister’s fight against black money, I think there should be a black paper,” he added. The Marxist leader put a 14-point poser to the government, asking it to come clean on it. He sought to know who decided to undertake demonetisation and who was responsible for the “more than 100 deaths” of people who had queued up outside ATMs/banks to withdraw their money after the note ban.

“Reportedly, more than 100% of the demonetised currency is coming back after Bhutanese, Nepalese... Currency is taken in. This shows it’s a successful money laundering scheme,” he alleged. Yechury objected to Modi’s picture in print advertisements of a private company after demonetisation was announced and alleged the intention was to give a profit bonanaza to corporates. Yechury claimed that the informal sector, which employs two-thirds of India’s workforce, has “collapsed” because of demonetisation and held the centre responsible for it.

Similarly, the “ill-effects” of demonetisation on rural markets and agriculture heightened the distress among farmers, he alleged. The CPI(M) leader said that in addition to the “failures”, demonetisation put extra burden by way of printing new notes which cost Rs8,000 crore and recalibrating ATMs by spending Rs35,000 crore. Referring to a report by the centre for monitoring Indian economy, Yechury said the informal sector suffered Rs1.50 lakh crore loss, thereby taking the total “additional expenditure” caused by demonetisation to Rs2 lakh crore.

“So, we, therefore, want accountability on this to be fixed. Those responsible for this must be punished and all the needle of suspicion points to the prime minister and the prime minister’s office. So, issue a black paper and answer all these questions,” he said. The government had on Wednesday said a “significant portion” of over Rs15 lakh crore of junked currency that came back into the banking system could be black money. Yechury sought to dismiss the government’s claim, arguing that since PAN card was used to accept the invalidated Rs500 and Rs1000 notes, the returned currency stands legalized.

The CPI’s national secretary, D. Raja, echoed Yechury on the issue. He claimed neither the prime minister nor the finance minister and the RBI governor have answers to what happened to achieving the objectives of demonetisation. He also said that no one knows the quantum of black money unearthed or to what extent the move affected small and medium size businesses and their workforce.

“Government has no figure on this. So, the RBI reports raised many questions. Now the government itself has today admitted that GDP is going down due to the demonetisation,” Raja said. The RBI had on Wednesday said that as much as 99% of the junked Rs500 and Rs1,000 notes have returned to the banking system.

The Reserve Bank, which has so far shied away from disclosing the actual number of junked currency deposited after 8 November last year, said in its annual report for 2016-17 that Rs15.28 lakh crore of the junked currency had come back into the banking system, leaving only Rs16,050 crore out.

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