Recently the Reserve Bank of India (RBI) claimed that the demonetized currency is back in the banking system. P. Chidambaram has asserted that the demonetization is the biggest scam to convert black money to white.
On Friday, the former Finance Minister said that people have more cash in hand than compared to before demonetization.
“Today, the cash with the public is equal or more than the cash (they had) prior to November 8, 2016. The cash in the hands of people is a good 1.4% more than what it was on November 8, 2016. Of the total 11 per cent household savings, 2 .8% is in cash. So why are people holding cash?” Chidambaram said in an interview to a leading news agency.
“Correspondingly, there is less public cash in the banks which means people have less confidence in putting cash in the bank and are more comfortable keeping cash in their homes” he added.
Was demonetization a scheme to convert black money to white?
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“The government claimed 3 to 4 lakh crore will not return to the Reserve Bank of India (RBI) and that will be black money stock that would be seized and would be a gain to the government and the RBI. If all that came back to the RBI, then the logical conclusion is that 3 to 4 lakh crore is converted into white,” Chidambaram said.
“There is a genuine suspicion, in fact, it is a charge now, that the Centre devised this entire demonetization exercise to enable people with a large holding of black money to convert it into white,” he added.
Chidambaram has also slammed Finance Minister Arun Jaitley’s defence on RBI’s demonetization report.
“I am not impressed what Finance Minister Jaitley says today, 21 months after demonetization. In fact, many of us think he was not even taken into confidence when demonetization was announced,” Chidambaram said.
“We are going by what the Prime Minister said in his TV broadcast on November 8, 2016. He set out three objectives for demonetization – black money, stopping terror financing and putting an end to counterfeit currency. So, why should I consider any other objectives other than those announced by the Prime Minister,” Chidambaram said. He also dismissed arguments that demonetization helped in money trail and slashing cash transactions.
“People are inventing reasons post facto as if money trail is the only purpose for which they did demonetization. You would have captured the money trail without demonetization, for example, I introduced the banking cash transaction. Anybody who deposits a large amount of cash or anybody withdraws large (amount of) cash will leave a trail and that trail was taxed at a minimal rate. Why do you have to put thousands and thousands of people to such misery?” he said.
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