Demonetisation: Why P Chidambaram’s charge of a gigantic scam doesn’t carry any weight


The Congress party and its spokespersons were till recently dubbing the ongoing demonetisation exercise as a gigantic scam without a shred of evidence or whiff of verisimilitude but the suave P. Chidambaram the former finance minister in the UPA government latched onto the huge haul of new notes seized by the Modi government to turn the tables on it.

He said lakhs of newly minted Rs 2,000 notes tumbling out of cupboards of crooks pointed to a huge scam being perpetrated by the Modi government. But like with the earlier allegations of Congressmen about demonetisation being a scam, his post haste started singing elegy about the immense hardship caused to the public particularly the poor. The subtext was hardship and inconvenience was scam by itself. Touché!

P Chidambaram. PTI

P Chidambaram. PTI

Shoot from the hip and then scoot is the stock in trade of Kejriwal who revels in tilting at the windmills and thirty seconds of fame wild charges bring. But for a seasoned politician and lawyer Chidambaram to do a Kejriwal shows desperation. In 2G scam that brought the downfall of the UPA II, the allegation was first-come-first served was a hush-hush way of awarding precious natural resources to cronies. Coal scam was worse. Coal blocks were allotted to cronies and sidekicks on the basis of screening committee recommendations gratis. The Apex Court rightly castigated the UPA government while recommending auction as the best way for distributing precious natural resources. The CAG’s quantification of both the scams at Rs 186,000 crore each gave further ammunition to the opposition charge of financial irregularities.

But in demonetisation, there is no whiff of irregularity much less a scam. If anything, there was an error of judgment and underestimation of the Indian crooks’ capability to extract a foot when given an inch. No fraud can be consummated without collusion. The crooks preyed on the cupidity of bank officials to get newly minted currency notes mostly of Rs 2,000 denomination in exchange for the demonetised ones by smugly producing fake identity cards mostly aadhaar. Exchange indeed was a powder keg waiting to explode. It conferred anonymity on crooks. But then they had not reckoned with the resolve and ability of the government to gun after them. Through informers, intelligence, spycams and what have you, the government has been successful in tracing the missing cash. More brazen was the act of depositing demonetised notes into the accounts of benamis and withdrawing them post haste.

Professor Bhagwati of Columbia University was bang on when he said demonetisation was one of those remedies that could have a range of repercussions some of them unpredictable. But that was not reason enough not to press ahead with it. On the contrary a good government is one, he said, that thinks on its feet as events unfold and neutralises the fraudsters quickly. The Modi government knew that the scheme could not be taken forward without enlisting banks but also knew that some of the bankers could prove to be its undoing. It wisely kept tabs on them.

Demonetisation then was a bitter pill that had to be swallowed in the face of failure of raids and numerous amnesty schemes to unearth black money sloshing around in the country. True it has brought in its wake untold inconveniences to the masses, making them stand in long queues and depriving some of their livelihood. But it was neither a scam nor a nostrum. Its biggest contribution is its success in mainstreaming the economy. That Rs 12.4 lakh crore has already poured into banks till 10 December, 2016 is a proof.

While the charge of scam was expected from the frustrated opposition clutching at straws and praying for Modi to trip, the charge of abdicating and disowning Indian rupee by the government itself is too ludicrous to warrant a reply. Suffice it to say, we have persisted with the Indian rupee and not hitched our stars to the American bandwagon like quite a few weak nations in the past. That is called dollarisation, a pusillanimous monetary theory that fatalistically condemns the nation to sink or swim with Uncle Sam.