Have courage to admit that note ban failed: Chidambaram to PM

Mumbai, Sep. 9 (PTI): Senior Congress leader P Chidambaram today dared Prime Minister Narendra Modi to have the “courage” to accept that note ban was a wrong decision.

The former Union minister blamed demonetisation for much of the trouble the economy is facing, saying it resulted in loss of 1.5 lakh jobs and the 1.4 percentage point drop in GDP growth virtually wiped out the micro, small and medium enterprises (MSMEs). “It does not require courage to make a wrong decision, but it requires courage to accept that you have made a wrong decision. Demonetisation was a wrong decision and the PM should have the courage to accept that he made a wrong decision,” he told reporters here.

“Where are jobs? Indirectly, government has admitted its failures. Minister for MSME Kalraj Mishra has been sacked, the skill development minister has been sacked, which means the skill development mission and creating jobs has failed.

The labour minister has been sacked because your labour policies have failed,” Chidambaram said.

Maintaining that the country is facing a “very bad economic crisis”, he said youth are bearing the brunt of the wrong policies of the government.

While 1.2 crore people are joining the workforce annually, not enough jobs are being created, he said.

Chidambaram said many more ministers should have been sacked in the last week’s reshuffle, and referred to “failures” in agriculture which has grown at 2 per cent in Q1, and also the change of guard at the commerce and industries ministry, where exports have declined and manufacturing growth is sagging.

Asked if the Congress will seek the PM’s resignation over the state of the economy, he said, “It is not easy (to ask) for the PM’s resignation….the PM has come to a conclusion that the labour, skill development and MSME policies have failed, for which he has sacked these three ministers.”

On Congress’ good show in Punjab, Manipur and Goa polls, Chidambaram said it is unfair to conclude that the recent elections were a (positive) verdict on note ban, and added that one should not be “dazzled” by the BJP’s thumping victory in Uttar Pradesh.

Terming the so-called Rs 16,000 crore gain from unreturned notes as “illusory”, he said the RBI had to spend much more for printing new notes and transporting them.

The eventual quantum of the scrapped currency returned to banks may be more than 100 per cent, and it should be noted that cooperative banks are still collecting old notes and NRIs are still depositing them, he said.

On the concerns raised by former RBI governors Raghuram Rajan and Y V Reddy on demonetisation, Chidambaram said, “No economist in the world feels it was good. Only the BJP version of economics says demonetisation was good.”

He said GDP growth has been coming down for six consecutive quarters, falling to 5.7 per cent in the first quarter of FY18, and the economy lost 1.4 percentage points (in GDP growth) since the note ban. The September quarter growth will also be bad, he warned, but did not offer a number.

The Congress leader avoided making a direct comment on Raghuram Rajan’s suggestion to scrap the Department of Financial Services for better governance at state-run banks.

He only said that Rajan seems to be in favour of privatisation, but state-run banks are needed.

Chidambaram also refuted the notion of political masters driving state-run banks, saying he never gave orders to bank chairmen when he was the finance minister.

On the banking sector’s NPA trouble, he said up to 40 per cent of bad loans have originated during the Modi regime, and alleged that bank chairmen are not taking decisions for fear of harassment from investigative arms of the government.