Demonetisation was a monumental blunder, GST hastily implemented: Manmohan

Demonetisation has proved to be a mere bluster to reap political dividends, the former PM said

Former prime minister Manmohan Singh on Tuesday came down hard on the Narendra Modi government’s key policy measures over the past one year, saying while demonetisation was a “monumental blunder”, it was followed up by a “badly designed and hastily implemented GST”.

Singh’s remarks came during his address to youths and small businessmen in Ahmedabad, a day before the Bharatiya Janata Party (BJP) was to observe the first anniversary of demonetisation on November 8 as ‘anti-black money day’.

“Demonetisation has proved to be mere disaster. One-percentage-point fall in GDP (gross domestic product) costs our nation Rs 1.5 lakh crore. Think of the human impact of this loss where businesses had to shut down,” said the veteran Congress leader, who is campaigning for his party in Gujarat, which goes to the polls next month. 

“The government did not heed our advice on demonetisation. Even more tragic is that after the monumental blunder of demonetisation, instead of providing relief to the poor, farmers, and small and medium businesses, the government inflicted a badly designed and hastily implemented GST on people. This is a complete disaster for our economy,” he added.

He said the note ban coupled with the goods and services tax (GST) would push people back into poverty after the previous Congress-led UPA government brought 140 million people out of poverty. Citing examples of Surat’s textile industry, Morbi’s ceramic industry, and Rajkot’s automobile components industry, he said the domestic industry could not cope with the impact of the two measures, resulting into China benefiting through increased imports. 

“In Surat alone, 60,000 looms have been discarded since July. 21,000 jobs have been lost in just one industrial cluster in Surat. In the rest of the country, it is equally bad, if not worse. The unprecedented growth in imports from China can be attributed to demonetisation and the GST. These twin blows damaged India’s SME sector,” the 85-year-old leader said.  Taking a further dig at the GST, Singh said the current structure was a “great departure” from the Congress’ vision and had “transformed into a mess”.

Taking a dig at GST, Singh said the current structure was a "great departure" from Congress' vision and has "transformed into a mess".

"Government did not pay any advice to Congress, neither in Parliament nor private consultations. GST has become a nightmare for small businessmen. Needless confusion has been caused by GST which has sowed deep-rooted fear of tax terrorism. At a time when the economy slowed down despite global conditions, tax terrorism has led to lowest growth in private investment in last 25 years," he stated.

Singh also called the Modi government's ambitious bullet train project between Ahmedabad and Mumbai an exercise of vanity while stating that it would neither benefit the 65 million Gujaratis nor the rest of the country.

"The Rs 88,000 crore soft loan may seem like easy money but it will still need to be repaid. Gujarati entrepreneurs know very well that if a deal is too good to be true then it is probably not good," Singh said.

Singh also maintained that the Gujarat government was the worst performer in settling claims of title deeds for tribals at an average of 44 per cent in the state as against 87 per cent nationally.

"Congress ushered in right to fair compensation, rehabilitation and resettlement by undoing 123-year-old imbalance through Land Acquisition Act. However, Gujarat government has taken controversial decisions to ease norms to sell forests land to industries. After decades, the time has come for people of Gujarat to repose their faith in Congress which will work with 65 million Gujaratis to reach new heights," Singh said in his address.