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Congress Slams Demonetization, Says Rs 2,000 Notes A Puzzle
Former finance minister Chidambaram says 'let us not call all people in the country as black money launderers' as 99 per cent of people have legitimate money
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Congress today (November 9) sought to pick holes in the Modi government demonetizing Rs 500 and Rs 1,000 currency notes, saying if the idea was to address the issue of black money why has it decided to introduce Rs 2,000 denomination notes, and terming the action as a "puzzle".
The main opposition party said if the common man faced problems in exchanging the demonetized notes, it would amount to "pure and simple harassment".
Former Finance Minister P Chidambaram told reporters that a similar move was also contemplated by the previous UPA government but the idea was dropped as "the economic gains were not too great".
"Introduction of Rs 2000 note is a puzzle. How will this help in preventing generation of black money? If new income or wealth is unaccounted, will it not be hidden in Rs 2000 notes. How the purpose of demonestization of high denomination notes is served if a new and higher denomination note is introduced? Government must explain this apparent puzzle," he said.
Chidambaram, a former Finance Minister, said Congress supported any move to check black money, but warned that the demonetization exercise may cause initial contraction and disruption of economic activity. The real test, he said, would be how quickly the old notes are replaced.
Chidambaram said while he supports the government's action taken to stamp out black money, "but the method adopted raises many questions".
"We support the objective of government to stamp out black money. But the method they have adopted raises questions...The move has come as a bolt from the blue for the common man," he said.
"The move may cause initial contraction and some disruption of economic activity. The test will be how quickly the old notes are replaced," Chidambaram said.
The former Finance Minister asked the government to handle the exchange of notes quickly, efficiently and without harassment to common people.
Chidambaram spoke soon after Rahul Gandhi targeted Prime Minister Narendra Modi over the move, wondering as to how bringing in the new Rs 2000 note is going to make black money hoarding a lot harder.
In remarks laced with sarcasm, the Congress Vice President said "well done Mr Modi".
"Real culprits" who have stashed black money are "sitting tight" while lives of farmers, small shopkeepers and housewives "have been thrown in utter chaos," he said in a series of tweets.
Chidambaram said that introduction of the new series of notes is estimated to cost Rs 15,000 to Rs 20,000 crore and "the economic gains of demonetization should be at least equal to that amount".
"If RBI form is made mandatory for housewives, small traders, it will be pure harassment and Congress party will condemn it," he said in reply to a question.
Asked if it will help curb the use of black money used for funding terror activities, he said it is "complete exaggeration" to say that the bulk of black money is used for terrorist activities or to say that bulk of it is counterfeit money.
Asked if the move was projected as an "antibiotic" to tackle terrorism, corruption and black money, Chidambaram said "antibiotics are good but an overdose of antibiotics can be bad".
"Let us not call all people in the country as black money launderers," he said, adding that 99 per cent of the people had legitimate hard-earned money.
"40 or 50 years ago, or even 30 years ago, black money was perhaps stored as cash. Empirical evidence tells us that today unaccounted wealth and income is largely stashed away in construction, real estate sector, bullion, jewellery and perhaps securities," he said, adding that it is difficult to assess the extent of black money.
"I cannot support anyone trying to launder black money into white. I am concerned about 98 and 99 per cent people who are legitimately entitled to exchange their money," he said.
Chidambaram said the real test for the government will begin on Thursday.
"How efficiently and how quickly that money is replaced.... If there is harassment or inconvenience and all kinds of questions are asked, then I think that will be completely counterproductive."