New Delhi [Inadis], Nov. 9 : Former finance minister P. Chidambaram on Wednesday alleged that the BJP-led NDA regime highlighting the terror financing aspect post the decision to scrap Rs.
500 and 1,000 notes is an exaggeration as comparatively small proportion of money is used in terror activities.
The Congress veteran, however, said if the Centre's move of banning high denomination notes is aimed at vacuuming black money then it's a welcomed step.
Chidambaram asserted that replacement of new currency with the old one should be done expeditiously to minimize problems for the middle class and poor.
"If the purpose of the decision is to curb menace of black money then it deserves our support. But the terrorist financing has been exaggerated as small proportion of money may be used for terror activities.
Figures are exaggerated," said Chidambaram. "Replacement of new notes with old notes must be done expeditiously with minimal problem to the poor, middle class people.
The test will be how quickly the old notes will be replaced by new when they are legally tendered in banks," he added.
Chidambaram further said though the idea is good but it is yet to be seen how the objective is achieved.
"We agree the objectives are sound but will have to wait and see whether or not they are achieved. Empirical evidence tells unaccounted wealth is largely stashed away in construction, jewellery; don't know how much is in hard cash," he said.
"It will be counter-productive if people who have legitimate money will be put through inconvenience and harassment.
I don't encourage or support unaccounted wealth or income, but there's a non-monetised economy, you can't call it black money," he added.
Chidambaram further said that earlier governments have also tried the tactic in the past but failed. "The government had demonetised high-value currency before in 1978 and it failed. Introduction of new series of notes is estimated to cost between Rs 15000- 20000 crore, hence the economic gains of demonetisation should be at least equal to that amount," he said.
"Various governments considered it but was dropped considering economic gains will be very small and inconvenience will be very large.
Bulk of this money is legitimate money," he added. Joining the chorus of protest against the Centre's move to demonetize Rs 500 and 1000 notes, Congress vice-president Rahul Gandhi earlier today asserted that ordinary people in the nation have been thrown into chaos and asked Prime Minster Narendra Modi as to how replacing notes makes black money hoarding harder.
Expressing his ire on Twitter, Gandhi said that this step was a testimony of how little the Prime Minister cared about the ordinary people including farmers, shopkeepers and housewives.
"While the real culprits sit tight on their black money stashed away abroad or in bullion/ real estate.Well done Mr Modi.
One Q for the PM: How is replacing 1000 rs notes with 2000 rs notes going to make black money hoarding a lot harder? #Modilogic," he stated.
In a surprise late-evening televised address to the nation, Prime Minister Modi said the notes in circulation can be exchanged at banks till December 30th, adding that some concessions will be allowed for use of these notes at hospitals and crematoriums, and to buy air, rail and bus tickets till November 11th.
But the short notice sparked concern among people who then formed long queues outside ATMs across India, attempting to withdraw smaller bank notes.
"Banks will be closed tomorrow. It will cause some hardship to you. Let us ignore these hardships. In a country's history there come some moments when every person feels he too should be a part of it," the Prime Minister said.
Everyone from the common man to Dalal Street experts lauded the government's ban on Rs. 500 and Rs. 1,000 notes. However, the move is expected to hit many sectors such as real estate and jewellery, where cash transactions are widespread.
Sectors like real estate and jewellery that use more of black money will take a big knock after Prime Minister Narendra Modi's massive crackdown with the withdrawal of Rs.
500 and Rs. 1,000 notes. Real estate stocks have taken a pounding in early trade as the sector is expected to feel the heat of the government's move.