New Delhi: Calling the central government’s demonetisation move a double whammy on the poor, West Bengal finance minister Amit Mitra said that the currency ban would further destabilize the fiscal architecture of the economy which had already been destabilised with the introduction of the goods and services tax (GST).
“We were already in the middle of restructuring the economy with the passing of the GST bill, and now the government has introduced another destabilisation into our fiscal architecture. With the GST were prepared for fiscal destabilisation for about two years but demonetization will have an even longer impact on the economy ,” said Mitra while addressing a press conference at the India International Trade Fair in New Delhi.
He also said that many economists have predicted a reduction in the GDP due to 86% withdrawal of liquidity from the economy.
“Many economists and even our former Prime Minister Dr. Manmohan Singh has pointed out to a 2% reduction in GDP, which by the way is an underestimate,” he said.
Talking about the impact of demonetization on the poor, Mitra said that be it the power loom workers in Maharashtra or tea plantation workers in West Bengal and Assam, all are losing out on work.
“70% of power loom in Maharashtra have suspended their operations due to cash crunch. About 50% of the labour here are migrant workers who are now returning home. Similarly, 70% of West Bengal’s workers in Surat’s gem industry have returned home,” he said.
Mitra also said that a good monsoon and a bumper crop had been offset by demonetisation, thus impacting farmers.
“There is a bumper Kharif crop that needs to be cut and sold but there are no buyers. What will the farmers do?” he asked.
To further drive his point, Mitra cited examples of countries like the Soviet Union, Ghana , Nigeria and Myanmar which have unsuccessfully introduced demonetization in the past.
To be sure, West Bengal chief minister Mamata Banerjee was one of the first political leaders to oppose the demonetization move. Hours after the Prime Minister announced the banning of Rs500 and Rs1,000 currency notes, she took to microblogging website twitter and called the move a “draconian step” and has since been asking for its roll back.
Banerjee even led a march from Parliament House to the Rashtrapati Bhawan along with leaders of National Conference, Aam Aadmi Party and NDA ally Shiv Sena on 16 November. Seeking immediate withdrawal of the decision, she met President Pranab Mukherjee and submitted a memorandum raising concern over the inconvenience that people were facing in the wake of the note ban.