Swamy said he supported the idea of demonetisation, but not the way in which it was being implemented.
The senior Rajya Sabha member, a known critic of Finance Minister Arun Jaitley, criticised the Finance Ministry for lack of preparation before undertaking the exercise, saying an economist should helm it.
"Economic development is a must, but you can win the polls (even) if the economy is flattened," Swamy said speaking on 'Desh Ka Mudda' (The issue before the nation) on 'Agenda Aaj Tak'.
"Our (BJP) spokespersons keep talking about development, but they should learn from (Atal Bihari) Vajpayee because even he talked about India Shining (BJP's campaign slogan in 2004 Lok Sabha polls) and left other things. We lost badly and (the BJP tally) were reduced to half," Swamy said, adding "in politics, economic development is a must, but that is not sufficient".
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"The politics that has been going on before 2014 was (about) how to divide the votes on caste, region, religion and language, by consolidating the minority and dividing the majority.
"If one has to combat that, then majority vote has to be consolidated. Hindus are 80 per cent, but BJP got 31 per cent votes (in 2014). Consolidating Hindu vote is compulsory," he said.
Swamy said there was no need for the Lok Sabha to pass Taxation Laws (Second Amendment) Bill, 2016, which gives people with unaccounted cash another chance to come clean. Instead, he said, Income Tax should have been abolished.
Swamy said the black money held by Indians abroad was
stashed away in banks, while that within the country flows into the economy.
He also said the government did not accept his suggestion of abolishing income tax.
The senior BJP leader said at a time when middlemen were converting black money for 25 per cent commission, why would people give 50 per cent to the government, referring to the amendments made in the IT Bill.
"Why will one give 50 per cent to the government. That would be legitimising his blacking money and his name would be in (government) record. If they (the Finance Ministry) had done it with proper preperation...Even if they wanted to bring Rs 2000 notes, it should have been of same size of Rs 1000 note."
Owaisi said Modi government is changing the goal post with demonetisation.
Senior Congress leader Digvijay Singh said demonetisation was "wreaking havoc" on the economy and the job market and added "things will deteriorate further".
Responding to a question, Owaisi said demolition of Babri Masjid was a "criminal act" and it was of paramount importance to punish the guilty.
Swamy said the new Babri Masjid could be constructed across the Saryu river and the proposed Ram temple should be allowed to be built at the site under dispute in Ayodhya.