Demonetisation, GST helped China as Indian domestic sector faltered: Manmohan Singh

Continuing his salvo against the Modi government over its economic policies, former Prime Minister Manmohan Singh blamed demonetisation and the Goods and Services Tax for increase in India's imports from China.

"Overall, as our domestic sector is not able to cope with demand, China is benefitted from this situation. In the first half of fiscal year 2016-17, India's imports from China stood at Rs 1.96 lakh crore. During the same period in fiscal 2017-18, the imports from China increased to Rs 2.41 lakh crore. This unprecedented increase of imports by more than Rs 45,000 crore, which is a 23 per cent increase in a year, can be attributed largely to demonetisation and the GST," Singh said while addressing traders in Ahmedabad today.

These twin blows damaged India's medium and small manufacturing sectors and our businesses had to run to Chinese imports at the cost of Indian jobs, he added. Singh called GST a badly planned and hastily implemented tax regime, which has led it astray from the motive of making tax compliance simpler.

On the eve of the first anniversary of the note ban move, Singh launched a fresh bout of criticism against Modi government to discontinue currency notes of Rs 500 and Rs 1000. "Demonetisation has proved too be mere bluster to reap political dividends while the real offenders have escaped. I repeat as I stated in parliament, this was organised loot and legalised plunder," Singh said.

"Black money and tax evasion are a menace that the country needs to tackle but demonetisation was clearly not the solution. It has been suggested many times in the past as one of the methods to eradicate black money, but as a responsible government we never took such a drastic measure because in our recent analysis the cost of demonetisation always exceeded the benefits very substantially," the former PM said.

"We know by now that none of the stated objectives of eliminating black money, terror financing and counterfeit currency have been met. To promote a less cash economy coercive steps like demonetisation are ineffective. The cash in circulation after one year is close to 90 per cent of the previous levels. The fact that more than 99 percent of the demonetised currency came back into the banking system has punctured the government's claims," he further added.

Singh slammed Narendra Modi government of burdening informal sector, small and medium sector entrepreneurs, and farmers with GST, and failing to shield them from the disruptive effects of demonetisation. The note-ban move will complete one year tomorrow.

"All that Dr Singh has to do is to compare the relative credibility of the India economy. Today, every international agency eulogise the kind of structural reforms India has initiated," said Finance Minister Arun Jaitley in retaliation to Singh's allegations.

Watch Manmohan Singh's address here:

Courtesy: Indian National Congress YouTube channel