Probe demonetisation ‘scam’: Chidambaram
December 13 2016 10:08 PM
People queue up outside an ATM in Hyderabad yesterday. Long queues were seen outside banks and ATMs all across the country.


Former finance minister Palaniappan Chidambaram yesterday attacked the government’s demonetisation move as the “biggest scam of the year” which would harm the country’s economy.
Bank notes in denominations of Rs500 and 1,000 ceased to be legal tender from midnight on November 8, a government measure to fight corruption and tax evasion.
The move led to widespread chaos as serpentine queues have continued at banks to get hold of new currency and exchange old notes.
Chidambaram referred to a series of raids in which hundreds of millions in new Rs2,000 notes were seized from hoarders and money laundering rackets amid the acute shortage at banks and ATMs.
“I can’t get a Rs2,000 note, yet crores in Rs2,000 notes found their way to individuals being raided all over the country,” Chidambaram said.
“This is the biggest scam of the year and this must be investigated. This is a criminal act and requires a criminal investigation,” Chidambaram, a prominent leader from main opposition Congress Party, told reporters in Nagpur.
He also described the scheme as the “worst attack on the poor” saying “even a natural calamity would not cause such pain”.
The long-term impact of the “thoughtless, meaningless” measure will be negative for India’s GDP, Chidambaram said, adding that foreign investors had withdrawn over $4bn in the past fortnight.
“I believe the people will not forget what is being done to them and will certainly not forgive the government for it,” he said.
“I went for a wedding the other day, and saw that the rich are not affected. It is the poor who are hurt,” Chidambaram said.
Dismissing demonetisation as “a thoughtless move”, he said “no one in the world has a good word for it. Every major newspaper and economists have condemned it”.
He questioned “what calculations went behind the government’s decision to permit people to withdraw Rs24,000” when banks lacked sufficient cash to dispense and people were forced to stand in long queues all over the country.
“Forty-five crore people are dependent on daily wages for survival. They have been affected by demonetisation. Who is going to compensate them,” Chidambaram asked.
But current Finance Minister Arun Jaitley slammed the Congress for calling demonetisation the “biggest scam” and stressed that the move would benefit the economy and the nation in the long run.
He also said “significant amounts” of money will be injected into the banking system over the next three weeks which would ease the cash crunch.
Targeting the Congress, Jaitley said corruption and scams peaked during the Congress tenure of 10 years and the government did not take any steps to curb corruption or black money.
“From 2G scandal to coal block, CWG, AgustaWestland helicopter deal, each of the scandals, which is even today discussed in public space, belongs to that period. Given this scandalous record, it is not surprising that the Congress is extremely uncomfortable with the anti-corruption campaign our government has launched.” 
He said between 2004 and 2014, high denomination currencies increased from a mere 36% to over 80%.
“There are economic costs of dealing in cash, there are social costs of dealing in cash. These are the costs which the system has to bear,” he said, adding that demonetisation was a step in the direction of “less cash economy”.
“It’s our strategy that from high cash-dominated economy, we should become a less cash economy where the amount of paper currency comes down. Cash will still exist and there would be a greater digitisation,” he said.
All the banks as well as RBI are having an institution of whistle blowers.
It is a due process that will be undertaken.
Due action has been initiated,” he added.
However, he also praised the banking industry for carrying out the “good work” since demonetisation.

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