Congress rubbishes PM Modi's claim of curbing black money by demonetisation

The Congress on Wednesday questioned the centre's decision to scrap Rs 500 and Rs 1,000 notes saying the move will bring hardships for the common people and may not help curb black money.

"Once again Mr Modi shows how little he cares about ordinary people of this country--farmers, small shopkeepers, housewives-all thrown into utter chaos," Congress Vice-President Rahul Gandhi tweeted.

Directing a query at PM Modi, he said, "One question for the PM: How is replacing Rs 1,000 notes with Rs 2,000 notes going to make black money hoarding a lot harder?," Rahul tweeted further adding, "While the real culprits sit tight on their black money stashed away abroad or in bullion/ real estate. Well done Mr Modi."

Hours later, the party deployed former finance minister P Chidambaram to counter the move which took everyone by surprise.

"If RBI form is mandatory for housewives, small traders etc, then it'll be a pure & simple harassment. INC will condemn it," he said referring to a provision that people who fail to get their cash deposited in banks by December 31, can approach the central bank by March 31, 2017.

Chidambaram wondered how the move to issue new notes will help curb black money.

"Introduction of Rs 2000 note is a puzzle. How will this move help preventing of Black Money?:

If the Rs 500 note will be replaced by a Rs 500 note, then what purpose would this exercise have served," he said.

Pointing out that previous governments too had attempted similar things, Chidambaram said that "In 1978, the Janata Government had demonetised high value notes but that action failed to achieve its objectives as high denomination notes were reintroduced and value of unaccounted wealth increased."

According to the former finance minister, 40 years ago, Rs 500 note was a high denomination note but not now. "Today it is doubted if it can be considered a high denomination note."

Urging the centre to ensure that common people faced no difficulty in getting their cash deposited in banks, Chidambaram said the cost of printing the new notes would be between Rs 15,000 cr to Rs 20,000 crore and the benefit from the new initiative should match that figure.

Expressing doubts if the "present cash to GDP Ratio of 12% will come down," he said, "the value of high denomination notes is around Rs 15 lakh crore and will that come down significantly."