Senior Congress leader and former Union Finance Minister P. Chidambaram said on Tuesday that the government’s decision to withdraw high-denomination currency was a “calamity” that had caused “indescribable” pain in rural India.
Addressing a press conference in Nagpur, he said: “No economy can function if 86 per cent of the country’s currency is immobilised and impounded.” It would take a minimum of seven months to print currency notes to replace the withdrawn banknotes, he said, adding, “and for this period you and I will have to stand in queue virtually begging for our own money.”
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Mr. Chidambaram said the decision to print Rs.2,000 notes was flawed and made life “easy” for currency-hoarders. He also termed the decision to exclude the District Central Cooperative Banks from the currency exchange process a way of “punishing” the farmers. “The farmers are left with no money to buy seeds, fertilizers and to hire labour.”
In a strongly worded rejoinder, Union Finance Minister Arun Jaitley said the comments were not surprising given the previous government’s record in battling corruption.
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He said the Congress was “extremely uncomfortable with the anti-corruption campaign that the NDA government led by Prime Minister Narendra Modi has launched.”
Mr. Jaitley said the re-monetisation process was continuing rapidly, “notwithstanding some transient problem which people have to face.” “Significant amounts are going to be injected in the next three weeks” which would gradually ease the pressure, he said.
He also dangled the possibility of a future cut in tax rates as a direct consequence of the government’s decision.
“Future transaction would be substantially digital, and once they are substantially digital, they would come in the tax net,” Mr. Jaitley said. “Therefore, the future taxation level would be much higher than what is currently being collected. This would also enable the government at some stage to make taxes more reasonable.”