New Delhi — India’s main opposition Congress party lashed out at Prime Minister Narendra Modi on Thursday after central bank data showed that his shock 2016 move to ban high-value notes failed to meet his key objective of flushing out money hidden from the tax authority.
Modi withdrew 500 and 1,000 rupee notes from circulation to make hoarded cash, or black money, worthless. The move aimed to bring billions of dollars worth of cash in unaccounted wealth into the mainstream economy and to hit the finances of militant groups suspected of using fake 500 rupee notes to fund operations.
But the move, widely known as demonetisation, badly hurt India’s cash-dependent economy and caused tremendous hardship to people forced to line up outside banks before the notes ceased to be legal tender.
Data released on Wednesday by the Reserve Bank of India showed that almost the entire amount of withdrawn currency had returned to banks, meaning Modi may have misjudged cash hoarding. The data gave Congress a major issue to hit back at Modi months before three big state polls and a general election due early in 2019.
"The PM [prime minister] had promised that black money, terror funding and fake currency will be eradicated," Congress chief Rahul Gandhi, the fourth-generation politician from the Nehru-Gandhi dynasty, told a news conference.
"The RBI [Reserve Bank of India] annual report proves that all his objectives failed," said Gandhi, adding he believed the demonetisation was meant to benefit a handful of Modi’s "capitalist friends".
Congress then flooded its Twitter page with graphics purporting to show that demonetisation had cost India 1.5-million jobs, 80-billion rupees in printing of new notes and a 1.5 percentage point drop in economic growth. Modi’s office did not respond to an e-mail after hours seeking comment.
Finance minister Arun Jaitley said demonetisation had helped India to move from being a "tax noncompliant society to a tax-compliant society". He said the number of income tax returns filed in 2017-2018 nearly doubled to 69-million from the levels of 2013-2014.
Reuters
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