Congress leader Shashi Tharoor on Tuesday said the “collateral damage” caused by demonetisation was so high that it took away all the benefits.
Participating in a debate in the Lok Sabha, Tharoor said the move inflicted an irreversible dent on the autonomy of the Reserve Bank of India (RBI) and the RBI Governor had been “reduced to a lamb”.
He stressed that almost all of the stated objectives of demonetisation have failed and also questioned the legality of the move.
“RBI’s balance sheets have not changed, its liabilities have not become less. Instead of ending black money, the move spawned more black money when banks slipped out new notes from the back door.
“From 9AM to 5PM they told public there is no money and from 5PM to 9PM they handed out new currency notes from the back door,” Throor said.
He said that unaccounted and unexplained new currency notes worth crore caught during this period was a proof of what he was saying.
“There were complaints of operational mismanagement.”
Tharoor said that due to very tight deadlines and huge rush, the tellers at the banks could not check every note and so a lot of fake currency slipped in.
“The RBI is not giving us any figure, but I guess, by December-end, 95-97 per cent of the total currency had come back to the banks. So, where is the fake currency which was supposed to be thrown out of circulation?” Tharoor asked.
The Congress leader said the stated objective of countering terrorism through note scrapping also failed as new notes were found on terrorists within a few days of the November 8 note ban.
“No correlation has been found between the number of terror attacks on Indian soil and the quantum of currency in circulation.”
Demonetisation also led to an increase in domestic violence, he said.