Hon. Chairperson, my first question is: why is this
Bill needed? It is needed because on the night of 8th November the Government
or rather the Prime Minister in a 48-minute address, unilaterally and
unnecessarily announced that 500-rupee and 1000-rupee notes amounting to Rs.14
lakh crore, which is 86.4 per cent of all the currency in circulation in India,
would be illegal as of midnight. In fact, three hours is what he gave our
country to pull 86 per cent of the country’s money out of circulation, and this
in a country where cash has represented 98 per cent of all transactions by
volume. Mr. Premachandran has already described why he thinks this is illegal.
Within days, the real result of the Modi announcement became apparent – the
severe disruption of normal economic activity. Since over 90 per cent140 of
the financial transactions are made in cash and over 85 per cent of the workers
in our country are160 paid in cash, the everyday economy
was ground to a standstill in the last two months of the
year.
The Government wants to get credit for its bold
move but what an inept implementation it was, Mr. Chairman! It made a mockery
of the initial shock and awe with which the announcement was
greeted. The appalling lack of elementary planning unleashed anarchy
on the economy and created insecurity and anxiety amongst people. Since enough
new currency had not been printed, the banks did not have even a fraction of
what was enough to meet the consumer demand for new notes. They did not have
the new notes and so they restricted withdrawals to small amounts of cash that
were insufficient for most280 people. This is also
illegal, Mr. Chairman, though my friend Mr. Premachandran did not mention it.
My question is: under which provision of the law can an Indian citizen be
denied access to his own account?320 Can
the Finance Minister name one country in the world that disallows people from
withdrawing money from their own bank accounts?
It is clearly a mask, Mr. Chairman, for the
Government’s inefficiency in not printing enough notes. Thirty days after the
Prime Minister’s speech, only 30 per cent of the currency in circulation had
been restored. The RBI told the Public Accounts Committee on January 18 that it
was up to 60 per cent; the SBI estimates that it may go up to 70 per cent by
the end of February; the Economic Survey claims it will all be back by the end420 of
March. But I do not think so because the rate of printing of 500-rupee notes
has been falling well below the target, and going by the rate at which the
printing presses are functioning, I suspect it will take another five or six
months to remonetise the entire banking system. Anyway, whenever that cash
system is fully480 restored, it is very clear that the
Prime Minister’s ‘bear with me for 50 days’ was yet another jumla.
There is even more inefficiency than that. When the Government started printing
notes, it did not print enough quantity of the smaller notes. So, we were lucky
enough to get a 2000-rupee note but no one could give us change for it, and
even more inefficiency is with the ATMs. It never occurred to the Government to
realize that if560 you want to put the new notes into
the existing ATMs, they should be the same size as the old notes. They made
them into a different size and they would not fit into the ATMs, and then they
had to scramble to hire 50,000 engineers across the banking system to
recalibrate the ATMs. More seriously, Mr. Chairman, the lack of
cash reduced both the consumption and the demand.
I feel sorry for my friend Mr.
Finance Minister because he was proud,640 and rightly
so, that we were briefly the fastest-growing economy in the world. Now
we can no longer say that because a booming economy that boasted the highest
growth rates in the world has suddenly become a cash-scarce economy and the
result was that the production went down in all sectors. Small producers
could not get working capital;700 some businesses even
have had to shut down; many daily-wage workers who are of course a majority of
the labour force in our country lost their jobs because firms did not have the
cash to pay them. The Economic Survey, published by the Finance Ministry,
itself states that demonetization is, “an aggregate demand shock, an aggregate
supply shock, an uncertainty shock and a liquidity shock”. It says, “The cash
crunch must have affected the informal economy”. The informal economy accounts
for nearly half the overall GDP and 80 per cent of the employment
economy and inevitably it runs on cash.800 Unemployment
has now shot up to a five-year high. According to the All India Manufacturers
Organization, micro and small-scale industries and traders have incurred 60 per
cent job losses and 47 per cent revenue losses840 because
of demonetization. Not only are the SMEs shutting down, according to AIMO,
medium and large infrastructure companies which they have surveyed have
reported a 35 per cent drop in employment and 45 per cent drop in revenues.
AIMO estimates even higher losses of jobs and revenue as of the end of March.
Real estate, construction and infrastructure, which provide the maximum
employment in our country after agriculture, are set to lose over one lakh
jobs over the next year. The construction industry which is worth
Rs. 8,00,000 crore and which employs 4.5 crore people, has virtually ground to
a halt with a drop of 80 to 90 per cent in revenues. There has even been
an inventory pile-up because, of course, there is no960 consumer
demand.
Hon. Chairperson, please have a look at the
indicators of the economy. Sales, cash flow, traders’ income,980 production
and employment were all down in the months of November and December of 2016.
That is why our former Prime Minister Dr. Manmohan Singh estimated that
the GDP of our country will shrink by 1 to 2 per cent for the fiscal
year. Local industries like footwear in Agra, garments in Tirupur, rubber
in Kerala and transport everywhere absolutely slowed down and, in many cases,
work had to be suspended for lack of money. The informal financial sector,
including the rural moneylenders who provide loan amount for 40 per cent of our
total lending, has almost collapsed. In fact, the rural India is in
bad shape. The fishing industry depending entirely on cash sales of freshly
caught fish is deeply affected. This is even affecting coastal security as
I pointed out during the Question Hour this morning. The number of boats going
out to1120 sea has been severely reduced because of
demonetization and we have fewer eyes and ears looking for suspicious
activities in our maritime waters. Traders are losing perishable stocks;
farmers are dumping their produce. There was another question today in the Question
Hour about that. In fact, there has been a study by economists at the Indira
Gandhi Institute for Development Research which in late November established
that the deliveries of rice to rural wholesale mandis were 61 per cent
below usual levels; soybeans were down by 77 per cent; maize was down by 30 per
cent; the winter crop could not be sown on time because no one had cash for
seeds and, therefore, the harvest may well be 25 per cent lower.
As I said, hon. Chairperson, we have another crisis
when it comes to my own State of1260 Kerala because
rural banking has been severely affected. The distinct character of our rural
banking sector is the major role1280 of the
cooperative sector, particularly primary cooperative societies which are
much more vibrant in Kerala than elsewhere. It is because over 70 per cent of
the deposits in primary agriculture cooperatives in India come from
Kerala. Over 70 per cent of the non-agricultural loans and advances made
in India are in Kerala; over 15 per cent of the agricultural loans
and advances in India are disbursed in Kerala. But the Reserve Bank
of India prevented all the 370 Central District Cooperative Banks and
93,000 primary agriculture credit societies in the country from depositing or
converting old notes after November 8 and the result has been particularly damaging for
my State. I want to say that it is not just the1400 question
of one State, but it shows certain thoughtlessness towards the
realities of our rural economy. Dairy, agriculture, and as I said, fishing,
have all been severely affected.
Tourism may not seem very important to some
people, but1440 for us in Kerala it is a huge
contributor to our GDP. It is also vital for employment across the
country. But foreigners were given a lot of inconvenience because of
demonetization; tourists were returning from Agra without seeing the
Taj because their notes were not accepted at the ticket window; travel plans
had to be curtailed. Tourism prevails by word of mouth. How
will you bring back the trust of foreigners who spread the word of
their harrowing ordeals in demonetizing India? The
Economic Survey has already lowered the growth rate projection to 6.5 per cent;
the IMF has come1540 down from 7.6 to 6.6 per cent; the
CMIE says it will be only 6 per cent for the next five years. I know the
Finance Minister has made a lot of claims about India’s growth. I
would say he and the Prime Minister have belied the expectations of the people
of India.1593
