Demonetisation has legitimised counterfeit notes worth Rs 5 lakh crore: Prakash Ambedkar
The middle class has now started to feel the pinch of demonetisation. They didn't pay attention when the labourers were complaining. Bad times ahead, warns leader.
Prakash Yashwant Ambedkar, grandson of Bharat Ratna Dr. B. R. Ambedkar, is an Indian politician and the national leader of a Bharipa Bahujan Mahasangh (BBM) party. He served as a Rajya Sabha member from 18-9-1990 to 17-9-1996, and also represented the Lok Sabha constituency of Akola, Maharashtra, India, twice.
In an exclusive interview to Narada News, Prakash Ambedkar spoke on demonetisation, among other topics.
India is witnessing a demonetisation drive that received both criticism and support from different corners. What is your take on the note ban?
It’s an unplanned move and the Prime Minister is not sure what he wants to achieve. Announcing the currency ban, he said he is targeting terrorists, black economy and the unaccountable currencies. I think all three issues he has misunderstood.
I agree there is a black economy, not black money. But it’s a parallel economy that covers the 40 percentage of the population. Within this, nearly 30 percentage is basically cash transactions, especially in construction industry, farmer sector and rag-picking sector.
These are the industries where everything goes on in cash and the beneficiaries of these cash transactions live hand to mouth. They don’t have sufficient funds to open an account, or they don’t have time to go the banks and most importantly, they are illiterate as far as the operations in ATM or by using the plastic money is concerned.
The Prime Minister has to realise that as soon as possible. This cash transaction is going to be here and it will remain a part of the Indian economy.
You should not be thinking in terms of western countries, where countries that are try to make all transactions in plastic money has begun the effort five years ago. But they are still able to do it even today and also say they need even more time to go for a cashless country.
How do you think the demonetisation affects Dalits and other backward classes in the country?
Let’s not only talk in terms of Dalits only. The status of Dalits and other marginalised group is same in the country in economic terms. Most of them are landless labourers, construction labourers, part-time labourers, contract labourers and also rag-pickers.
They all have been affected. The labour market based in Delhi has stopped as there is nobody to buy the labour. I think nearly four crore labourers have been affected. They are without jobs and they are now surviving on what they have saved.
Do you believe that PM Narendra Modi took an autocratic decision?
Yes, it is a dictatorial decision. It’s a whimsical decision. He didn’t take anybody into consideration. You must be very clear about the impact before you take such decisions.
Earlier, while talking in Arnab’s Times Now show, I had said the 30 per cent of the people are out of the banking sector and they are going to be affected. It has come true now.
In the initial days, lower class stood in long queues to exchange or deposit their money. But the last few days, it is the middle class who is standing in the queue because debit card limit has exceeded. They don’t have change even for a coffee or tea, and they have started making noise now.
And, more importantly, the middle class is going to become more conservative in terms of spending. They are going to spend only minimal amount to meet the necessities, the rest is rest is going to be on hold.
An estimated Rs 11 lakh crore has been deposited in banks so far, already exceeding the previous estimates. What is government going to do now?
If you look at the figures doing rounds, it is hardly three and half crore. Even if you keep that to be a true figure, it’s hardly 2 percentage of the total currency printed by the government and out of this, I would say, 70 percentage is in rolling.
Somebody must ask the PM what is the funds that was rooted through Mauritius in 2001 and the funds that have come via Dubai in the form of unsecured loans. They are just written off. The beneficiary is basically become the owner who received the secured loan.
Even the present government allows investment in housing industry. What is the fund that was received in the housing industry and the rules use by the person who was holding the non-taxable money?
You are talking about the passive or active money?
Both. You don’t have the exact quantum of taxable income now. The government earlier said this is the x amount we printed in currency, but that is going to be exceeded by December 31. So in one way, what you have done is, you have brought the fake counterfeit currencies, by your non-application of mind, into circulation.
So what is going to happen now is the bank coffers would increase. Because, you have legitimised that money by accepting it. Earlier, it used to be counterfeit, but now you have made it in cashable, legitimising the counterfeit currencies.
Earlier banks were monitoring this as there were enquiries before encashing it, otherwise banks will burn it. But, after demonetisation, you can come and deposit the counterfeit currencies.
How much volume of counterfeit currency would be there, what you think?
I think it’s about 5 lakh crore. Now my doubt is, whether currency printed in Pakistan has been pumped into the country to take advantage of the situation. But there is no mechanism in the ATM to check whether the money is fake or not .
And the money that has been deposited so far is taxable money. What about the money hoarded by corporates, which they haven’t deposited yet. If the government takes account of that, it will double the amount that they have printed.
Another problem is the legality of the note ban, as Subramanian Swamy raised earlier. Nobody knows the exact order of the note ban, it’s not in the press. The notes are the property of the citizen, only the proprietor can cancel it. The RBI governor promises to pay the bearer a sum of x after taking equal value of gold or something else from the government.
Therefore, the only person authorised either to cancel or exchange is RBI governor, not the government. The RBI hasn’t said anything about it. That is the reason foreign countries have stopped taking Indian currencies.
Manmohan Singh said GDP can decline by 2 percentage points due to note ban, what is your take on this?
It will affect the GDP more than that and it’s a monumental mismanagement as he mentioned. The current season has come to a hold. Somebody should take a survey of one village and see whether sowing is taking place or not. There is no sowing.
So it is going to affect us badly?
That’s what I said. The labour class got affected and made noise. But nobody cared. Now middle class is making the noise. They have now realised what the labourers was saying is true. That’s why I said the hoarding is going to take place. The spending will be minimal now. So whatever the middle class is pumping in is not coming as rolling. It’s now completely a U-turn now.
The purchasing and spending power of middle class has reduced. So it will affect the small scale industries. And, in the next phase, it will get start affecting large scale industries. It’s a chain.
I think, it will take nothing less than 9 months to replace the currencies. Out of that money that is being replaced, 80 percentage is being hoarded by those who were not hoarding earlier. So we have a new class of hoarders now. This was the class paying tax regularly earlier, now they are forced to hoard. The money is still taxable, but they would only keep it with the bank.
So there are two hoarding class now. One is with the taxable income, other is with unaccountable money. It is going to effect the rolling of money in the market.