Modi’s note ban was the biggest scam of 2016, says P Chidambaram


Terming demonetisation as the “biggest scam of 2016”, former Finance Minister P Chidambaram has said the country is likely to grow by 6-6.5 per cent in 2016-17, much lower than what have been predicted by the CSO and RBI, due to the impact of note ban.

Notably, the Central Statistical Organisation (CSO) has predicted a growth rate of 7.1 per cent and RBI pegs it at 6.9 per cent for financial year 2016-17.

biggest scam 2016

“I am sorry to make the prediction that 2016-17 will end with growth (rate) between 6 and 6.5 per cent, a good one per cent down from the earlier estimate and that means a hit of Rs 1.5 lakh crore on GDP. The GDP this year is Rs 150 lakh crore, so one per cent hit is Rs 1.5 lakh crore,” Chidambaram said at a function here today.

He is in the city to campaign for the February 21 Brihanmumbai Municipal Corporation (BMC) polls.

Without naming Prime Minister Narendra Modi, he said, “So, somebody hit an idea in his head, he decided to go on television and announce demonetisation, and the hit is Rs 1.5 lakh crore (on GDP).”

He said the growth rate in financial year 2017-18 will be same at around 6-6.5 per cent.

“2017-18 will not see a growth higher than what we have in 2016-17 as the world economy is not benign anymore and we have a unpredictable man sitting in the White House,” the senior Congress leader said, adding that growth would continue to be at the same levels in 2018-19 financial year as well.

Talking about demonetisation, he said sooner than later the government will realise the folly of demonetisation.

“You first demonetise and then say we are remonetising.

What is this joke?” Chidambaram said.

He said Rs 15.44 lakh crore worth of currency was cancelled overnight and now the government is printing notes to bring back Rs 15.44 lakh crore of notes.

He termed demonetisation as the “biggest scam of 2016” which the government does not want to acknowledge.

Taking away old notes and printing new notes will not put an end to corruption, or black money or counterfeiting, he said, adding that full remonetisation will go up to June.

After taking away Rs 15.44 lakh crore worth of currency, now the currency in circulation, including in the denominations of 100, 50, 20, 10 and the new 500 and 2,000 is now about Rs 9.5 lakh crore, he said.

But to sustain an economy which is Rs 150 lakh crore, Rs 9.5 lakh crore is not enough and more money needs to be printed, Chidambaram said.

“By March, we should have about Rs 11 lakh crore of currency back in circulation and by June we would have Rs 15.44 lakh crore. This is a classic example of ‘khoda pahad, nikli chuhiya’ (Much ado about nothing),” he added.

Chidambaram said that of the four engines of growth — private investment, private consumption, exports and government expenditure, only the last one was functioning.

He said private investment is dead almost for 18 months and even private consumption, which was running reasonably well, was affected after the demonetisation was announced on November 8.

“Nobody has confidence to spend money because you don’t know what will happen. Confidence in banks, RBI and words of the government has gone,” he said.

Chidambaram said exports have been less in the last three years.

“Only government expenditure, as government can spend money, is still a wheel which is inflated…a tyre with air in it. But, how can a car run on one wheel. So, the state of the economy is quite dismal,” he said.

The Congress leader said that 75 per cent of small and medium industries in areas such as Hyderabad, Moradabad, Coimbatore, Jalandhar, Agra and Kanpur are almost closed due to demonetisation.

He said a closed business can never be revived in less than 12-20 months and so the growth would be impacted going forward.

“Which is why although the economic survey-predicted growth for this year will be 6.5-6.75 per cent, the budget document does not put a figure for the next year’s growth. I think that is very wise on the part of the government to not to give a number and get trapped in that number,” he said.


  1. The congress party has a vast discussion topic to speak on demonetization since the policy has affected many people, specially , the lower income groups. It is taking the results of currency ban and the sufferings of people to explipoit for political mileage. It is projecting the failure of government with clear evidence.

  2. Mr Chidambaram is an honourable person! , He is a successful FM of India for 2-3 terms. Now calls DEMONETISATION a SCAM! Demonetisation is a open declaration and not a contract or concession or a licence given to any interested parties. PC calls it a Scam ! For argument sake, being in the opposition, he could allege that it is a ” foolish” decision, like that US Foreign Secretary said, when Vajpayeeji’s govt conducted the 2nd Pokaran Nuclear Test was conducted in 98. Now Finance Wizard says Demonetisation causes drop in GDP by 1%, amounting to about 1.5 lakh crores. He is better than his illustrious predecessor FM, and 2 term PM, who predicted loss of GDP by 2%! Growth rate from 2004-2009 in the UPA first term improved because of the impact of impetus given by Vajpayeeji Govt. for making investments in infrastructure sectors ESP Golden Quadrilateral etc.,

    Mr Chidambaram got the credit..Congress won the 2009 elections on the increased GDP, and by waiving farm loans upto 65,000/- Crores pushing banks into bankruptcy at the expense of tax payers. GDP fell in the second term.amidst scams galore. Zero loss theory very viciforociously advocated by PC and Kapil in 2G scam, has been proved to be a deliberate ploy to mislead Parliament and public at large, CWG and Coal scams apart! Now, PC calls DEMONETISATION a Scam! Ofcourse, they are struggling hard to look for a scam in NDA govt. Not being successful, they gave to name anything, like Demonetisation, which is very good decision, a scam! Even, they may call presentation if the Union Budget in Feb 1st , a scam!

    If course, there are fall outs if Demonetization. Both FM and RBI were not equipped to handle Demonetisation issues. RBI went in issuing conflicting circular s. Some bank officers played mischief and contributed to the Illeffects. Govt’s expectation of surplus of about 2 lakh crores, proved to be a misconception. People who had hoarded big notes, went behind battle lines and infiltrated through the fragile fence. It could be failure, but can never be termed a scam. But perhaps, some wise ex FM’s and PMs could tell how big money bags and political parties converted their own cash into new notes, when people stood in the Que to exchange their old notes into new notes, unsuccessfully!


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