Yashwant Sinha slams PM Modi, RBI on demonetisation ‘mistake’

File photo of former Finance Minister Yashwant Sinha

Former Finance Minister Yashwant Sinha said Prime Minister Narendra Modi, under the mistaken belief that demonetisation would bring a bonanza of ₹3-4 lakh crore, repeated a five century-old mistake

Founder of Rashtra Manch (National Forum) and former Union Finance Minister Yashwant Sinha on Monday said demonetisation has "failed comprehensively".

Speaking on the launch of renowned economist Arun Kumar's book Demonetisation and the Black Economy, the senior BJP leader also noted that the abolition of ₹1,000 note, which was reintroduced by him in 2000, "pained" him.

"I felt pained personally. After 1978 demonetisation, I had brought back the ₹1,000 note that was abolished. I felt as if my child has been killed. Apart from that, in order to clean up, you introduced ₹2,000 note?" he said.

The BJP leader said that he felt Prime Minister Narendra Modi was told demonetisation would fill government coffers. "My own feeling is that someone told the Prime Minister that if he goes for demonetisation, ₹3-4 lakh crore will come. It will be a bonanza for the government... that unfortunately did not happen," he said.

Sinha questioned why the Reserve Bank of India (RBI) did not issue the final figures on the cash that has been collected post November 8, 2016 demonetisation of ₹500 and ₹1,000 notes. "After the 98.8 (%) figure, they have not told us the final figure. Maybe it would be thoroughly embarrassing if we admit that more money has come back," he said.

He went ahead to compare PM Modi to 14th century Delhi Sultanate ruler Muhammad bin Tughlaq, who had introduced token currency of copper and brass coins. "There used to be a king, who shifted the capital to Daulatabad... He also did demonetisation. We have gone back five centuries to repeat the same mistake," Sinha said. While he did not name the king, the reference was unmistakable.

Sinha said "responsible people" in the government were not consulted before the decision was taken, but they had to defend it. He also question the impact of demonetisation on black money, and questioned where the electoral fundings were coming from. Sinha also said that post demonetisation, "tax terror" is back.

Arun Kumar's book says the unorganised sector, which functions largely on cash, has been "damaged irretrievably". A note on the book said demonetisation was carried out on the "mistaken belief" that "black means cash". It also argued that cash in an economy does not determine the level of corruption, and having a less cash economy would not determine the level of corruption in the country.

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