Virendra Pandit
New Delhi: Although Prime Minister Narendra Modi did not consult Pranab Mukherjee ahead of demonetization in November 2016, this secrecy was necessary, the then President has said.
While he supported the PM’s sudden announcement, the ex-President said the move did not achieve its objectives.
In the fourth volume of his memoirs, The Presidential Years, Mukherjee said: “PM Modi had not discussed the issue of demonetization with me prior to his announcement on 8 November 2016. I learned of it along with the rest of the country when he made it known through a televised address to the nation.”
However, the “suddenness and surprise” was absolutely necessary for such an announcement, the Congress veteran, who passed away in New Delhi on August 31, 2020, at the age of 84, said.
“There has been criticism that he should have taken lawmakers and the Opposition into confidence, before making the announcement. I am of the firm opinion that demonetization could not have been done with prior consultation because the suddenness and surprise, absolutely necessary for such announcements, would have been lost after such a process. Therefore, I was not surprised when he did not discuss the issue with me prior to making the public announcement. It also fitted in with his style of making dramatic announcements,” Mukherjee said.
After the announcement, the PM discussed the need for demonetization with him and had outlined three main objectives of the “bold step” — tackling black money, fighting corruption, and containing terror funding.
“He desired explicit support from me as a former finance minister of the country. I pointed out to him that while it was a bold step, it may lead to a temporary slowdown of the economy. We would have to be extra careful to alleviate the suffering of the poor in the medium to long term. Since the announcement was made in a sudden and dramatic manner, I asked the PM if he had ensured that adequate currency was there for exchange. I extended my support to him.”
The former president wrote that even he had sent a note on demonetization to the PMO in the 1970s after the successful implementation of the Voluntary Disclosure of Income and Wealth Ordinance, 1975, but it was not accepted by the then PM, Indira Gandhi.
About Indira Gandhi’s view on demonetization, Mukherjee said: “She did not accept my suggestion, pointing out that a large part of the economy was not yet fully monetized and that a substantial part of it was in the informal sector. Under these circumstances, she argued, it would not be imprudent to shake the faith of people in currency notes.”
Questioning the decision of demonetization was ‘understandable’ because it shook the confidence of the people in the banking system.
“But perhaps one thing can be stated without fear of contradiction: that the multiple objectives of the decision of demonetization, as stated by the government, to bring back black money, paralyze the operation of the black economy and facilitate a cashless society, etc., have not been met,” he added.
