Former Union Minister P Chidambaram on Friday slammed the Centre for going ahead with demonetisation without properly understanding and considering the issue and said none of the objectives claimed by the Union government for scrapping the Rs 500 and Rs 1000 notes will succeed.
Targeting the Centre’s objectives for demonetising the high value notes, to “root out blackmoney, corruption and taking on counterfeit currency,” he gave a point by point rebuttal to substantiate that such goals cannot be achieved.
On black money, he said, “black money is not a stock, it is a flow,” wherein black money gets converted into white money or vice-versa with the “velocity of circulation.”
He said “if there is a demand for black money you cannot avoid supply of it...if there is demand there will be supply and you cannot root out black money.”’
Giving examples like buying or selling of property, he said black money was sought in several situations, “if you want to stop black money, you should target the fountainhead of demand.”
That was why, he said even after demonetisation, “the demand for black money continues and so does the supply ... now black money is in the form of Rs 2000 notes which was previously in the form of Rs 1000.”
Addressing party workers at a public gathering at the Congress party’s State headquarters Sathyamurthy Bhavan, he asked if corruption had stopped because of demonetisation.
He said the first case of corruption after scrapping of notes allegedly happened in “Gujarat’s Kandla” and now “corruption happened with Rs 2000 notes.”
Coming next to counterfeit currency, he said government had told Parliament that only Rs 400 crore worth of notes were fake and asked how counterfeit currency could be stopped through demonetisation.
“Out of the Rs 17 lakh crore in circulation, Rs 400 crore was only 0.02 per cent of it and to root out 400 crore fake notes, the intelligent people declared Rs 15,44,000 crore notes as not legal tender,” he said, amid thuderous applause from party cadres. “If you have mosquito problem at house, will you burn down your house?,” he asked.
“Out of the three objectives, none of it will succeed,” he said adding corruption’s fountainhead should be blocked, and action must be taken against those demanding black money. On counterfeit currency, he said “the most counterfeited currency in the whole world is the American dollar.”
He said making counterfeit currency “is not a rocket science,” adding “only machines make notes, if the government gets the technology today those who make counterfeit currency may get it after a year or two.”