New Delhi: Former finance minister P. Chidambaram lashed out at the NDA government on Saturday, saying that demonetization and GST had destroyed the economy, forcing small and medium businesses to shut down and stemmed job growth in the country. Interacting with businessmen at an event named Samvad in Rajkot, the Congress veteran said demonetization was not a bold step, but a reckless one. “What’s a bold step? A farmer who commits suicide is also a bold step? Do you welcome it? Committing suicide also requires courage. I call it rash, reckless and an adventurous step. Demonetization has destroyed lives. For two to three months, millions of people stood in queues to exchange notes. Nearly, 140 people lost their lives. Carpenter, rickshaw pullers, plumbers, who depend on daily cash earning, went without business for two months. Demonetization was a foolish step,” Chidambaram said.
The leader said ‘notebandi’ had failed to achieve its stated objectives like ending black money and curbing terror funding. He also said that there was nothing like black money, but a “shadow economy” that operated in India. By “shadow economy”, Chidambaram said he meant income that escaped the tax system.
“There is nothing like black money but merely income which is taxed and income that is taxable but escapes the tax net. India’s shadow economy is around 12 per cent. There are many European countries whose shadow economy is more than 12 per cent. Even the US has around eight per cent shadow economy. What is shadow economy? It is income that your tax system is not able to capture,” he said.
The Congress leader said to curb “shadow economy”, the tax system should be made more efficient. “The answer to shadow economy is to make your tax system more efficient. If you put cruel tax rates, people will avoid it. People will say why should I pay. If you make the tax system friendly, they will pay. The answer is not demonetization. It’s like saying there is a mosquito in my house, so I am going to burn down my whole house,” he said.
When the GST came into effect in July, Chidambaram had said the tax measure was hastily implemented and it would trigger inflation. On Saturday too, he came down heavily on the government. He said that the requirement for filing three returns online per month had forced small and medium businesses to shut down. “If you invest Rs 1 crore in big businesses, it won’t create jobs. But small and medium businesses that create jobs are struggling for survival. Therefore, they are not hiring and no jobs are being created,” he said.
Chidambaram slammed the government’s claims that the economy was on a strong wicket, saying demonetization and GST had sent the economy into a downward spiral. “Day before yesterday, the Finance Minister said the economy is on strong micro economic fundamentals. And the finance secretary said it was growing at 7.5 per cent between 2014 and 2017. Why did they announce Rs 5 lakh crore Bharatmala project? Why are you announcing bank recapitalization all of a sudden? In your heart, you know things are not good. In the last six quarters, the growth rate has gone down from 9.1 per cent to 5.7 per cent, a drop of 3.4 per cent,” the Congress leader said.
The former Finance Minister opined that it was possible to overcome the situation by “taking right steps and not taking wrong steps”. He said he had faith there were people in the country who could take right steps. “India doesn’t deserve growth rate below 5.7 per cent and it is possible to take it up by taking right steps and not taking wrong steps. But for that to happen, the government must acknowledge that they committed a mistake through demonetization and GST. The government must hire someone from outside to correct the mistakes. Those in government can’t do it as they are the ones who have committed the mistakes,” said Chidambaram.
Speaking on the agrarian crisis in poll-bound Gujarat, Chidambaram claimed that 1,326 farmers committed suicide in the state over the last four years. “There are no jobs today. Jobs will be created only if small and medium businesses grow. To help them grow, small businesses should not be required to register. Medium businesses must be given the right to self-certification,” he said.
Taking a dig on the Modi government’s hard talk about “vikas”, he said, “People talk about growth. But what is the use of rojgar-mukta vikas (development that is not accompanied by job creations)?” he asked.
The Congress leader also accused the NDA government of misplaced priorities. “They will invest Rs1 lakh crore on bullet train between Mumbai and Ahmedabad. How many people will travel in it. Around 300 or 400? Can’t we give Rs 1 crore to each school so that new buildings are built, toilets are built, teachers are hired. Our priority is education, health, employment. Instead, they could have focused on making the existing rail network better, cleaner and efficient,” Chidambaram said, while acknowledging that though Japan was extending a loan for the project, India would have to repay it at some point in time.