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Every rupee will have a trail, says PM in his first interview post note ban

Demonetisation decision has bamboozled the best economists around the world but 1.25 billion citizens have welcomed the move wholeheartedly, PM Narendra Modi tells India Today magazine in an exclusive interview, as he defended his decision to abolish 86 per cent of the country's cash overnight.

Mail Today Bureau   New Delhi     Last Updated: December 30, 2016  | 11:33 IST
Every rupee will have a trail, says PM in his first interview post note ban
India Today Group Editorial Director Raj Chengappa in conversation with Prime Minister Narendra Modi at the Prime Minister's Office.

While critics have found fault with the government's preparedness in implementing the November 8 decision, the PM said he was well aware of the magnitude and complexity of the challenge. "It is no small thing that no significant incident of unrest has taken place in the country," he told India Today Group Editorial Director Raj Chengappa. "At the same time, as with every other process, there is always room for improvement, and I believe that we can, and must, always improve."

 

The abolition of high-value bank notes aimed at constricting the nation's shadow economy has also hit millions of legitimate businesses and millions of people who lack bank accounts and use cash to pay for everything from groceries to hospital stays to land purchases.


ALSO READ: Demonetisation: What could change after December 30

But Modi said demonetisation has forced black money out into the open, whomsoever it may belong to - corrupt politicians, bureaucrats, businessmen or professionals. "Holders of black money may hide behind the bank accounts of others, but unlike cash holdings, they can be traced. In this game of hide and seek, they have a few days to hide, but the government has the time, mechanisms and, most importantly, the will to seek them out," he warned.

The Prime Minister pointed out that eminent economists such as James Henry, Prof Kenneth Rogoff and Prof Larry Summers have been advocates of demonetisation.

ALSO READ: 50 days of demonetisation: What all happened

"In India, too, demonetisation has been recommended since the 1970s. The Wanchoo Committee, headed by a retired CJI and with leading economists and chartered accountants as members, had in 1971 recommended the demonetisation of 85 per cent of the currency, comprising Rs 10 and Rs 100 notes," he said.

"People across the political spectrum have since called for its implementation, ranging from then Congress CM Giani Zail Singh in the National Development Council to then CPI(M) MP Jyotirmoy Basu in Parliament. What we have done now is broadly in accordance with the recommendations of that committee."

If anything, India is 40 years late in this decision of demonetisation, Modi said. "It would seem a matter of common sense to understand that if India's economy was weak, this decision could not have been made," he added. "It was consciously taken when the economy is in good shape, as such a sharp correction could have only been made then to fortify its foundations and give it a further boost." Many private indicators have signalled that India's $2 trillion economy will be hurt by the currency switch. Opposition parties, including the Congress, have called the decision a "massive scam" and a "political move" while they held protests demanding the government retract the step. But Modi hit back at rivals, accusing them of trying to shield the corrupt. "I pity some of our opponents, especially the Congress leadership, for the desperation they have been exhibiting," he said.



"On the one hand, they say I took this decision for political dividends, and on the other, they say the people have been troubled and are deeply unhappy. How can the two go together? Maybe, as members of the Opposition, they have to conjure something up to criticise me about, however illogical it may be. I sympathise with their difficulty." He took a dig at his predecessor Manmohan Singh, who called the decision to scrap high-value currency notes "organised loot" and a "monumental mismanagement".

"His reference to 'organised loot' was perhaps a reference to the unending string of scams under his leadership, from the coal scam to the 2G and CWG scams," he said. "Demonetisation, on the other hand, is an unprecedented step to confiscate the loot of the corrupt." Modi also quoted from former home secretary Madhav Godbole's book about how, as private secretary to then finance minister YB Chavan, he described his minister's interaction regarding demonetisation with then prime minister Indira Gandhi.

"When YB Chavan told her about the proposal for demonetisation and his view that it should be accepted and implemented forthwith, she asked Chavan only one question: 'Chavanji, are no more elections to be fought by the Congress party?' Chavan got the message and the recommendation was shelved."

The PM took on detractors who have panned frequent modifications to the original decision. "One must be able to distinguish between niti (policy) and ran-niti (strategy) and not put them in the same basket," he said. "The decision of demonetisation, which reflects our niti, is unequivocally clear, unwavering and categorical. Our ran-niti, however, needed to be different, aptly summarised by the age-old saying of 'Tu daal-daal, main paat-paat'. We must stay two steps ahead of the enemy."

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