From monumental blunder to 2G, CWG loot: Manmohan Singh and Arun Jaitley spar over state of economy

Former prime minister Manmohan Singh today said the "twin blow" of demonetization and the GST was a "complete disaster" for the country's economy and chided the Modi government for not having learnt "any lessons" from what he called the "monumental blunder." Escalating the Congress offensive against Prime Minister Narendra Modi on the eve of the first anniversary of the ban of Rs 500 and Rs 1000 currency notes, Singh also tore into the government over the ambitious bullet train project, calling it an "exercise in vanity." India's first high speed rail project will link Mumbai and Ahmedabad.

Singh said he is repeating what he said earlier that demonetization was an "organised loot and legalised plunder." He also called it a "reckless step" and a "disastrous policy" which failed to achieve its stated objectives and said the Goods and Services Tax(GST) was "hastily implemented." With Gujarat headed for Assembly polls next month, the Congress fielded 85-year-old Singh, an accomplished economist, at a party event to take on Modi in his home state. The gathering comprised mostly those representing small and medium businesses who are up in arms against the continued difficulties faced by them over GST issues. Singh later addressed a news conference where he said Modi's plan of doubling farmers' income by 2022 would end up as poll 'jumla'(rhetoric).

Stating that "bravado and drama are poor substitute for courage with conviction and the ability to execute well", Singh told the party event that demonetization and GST have sown a "deep-rooted fear of tax terrorism" among the business community. Singh said "demonetization was clearly not the way to end the menace of tax evasion and black money." "demonetization has proved to be a mere blister to reap political dividends while the real offenders have escaped. I repeat, this was an organised loot and legalised plunder," the former prime minister said.

At the function organised by the Congress, Singh said that Modi should have taken inspiration from two of the "greatest Gujaratis the world has seen -- Mahatma Gandhi and Sardar Vallabhbhai Patel." "Good governance involves both head and heart. It pains me to say that the Union government has completely failed to do its duty on both fronts," he said. "Think of the human impact from this lost growth -- the lost jobs, the youth whose opportunities have vanished, the businesses which had to shut down and the entrepreneurs whose drive to succeed has turned into discouraged disappointment," he said.

"What is even more tragic is that none of the lessons from this monumental blunder have been learnt by the government," Singh rued. "Instead of providing relief, as I had requested in Parliament, to the poor and marginalised, farmers, traders, and the small and medium businesses, who suffered the brunt of demonetization, the government chose to inflict on them a badly designed and hastily implemented GST," he further said.

This "twin blow" was a "complete disaster" for the economy, he said.

"Did the prime minister stop to consider the wisdom of the Mahatma when asking the RBI governor to sign on the dotted line or while implementing GST in haste?" Singh said, adding that Modi failed to take into account the impact these two policies had on the informal sector and jobs. "If the prime minister had paid attention to Mahatma Gandhi's talisman, the poor of India would not have suffered the way they did," he said, adding tha Modi also failed to take inspiration from Sardar Patel.

"When undertaking the endeavour of 'One Nation, One Tax', if the prime minister had taken inspiration from Patel's resolve and attention to detail, the outcome today would have been very different. Bravado and drama are poor substitute for courage with conviction and the ability to execute well." Modi and his Japanese counterpart Shinzo Abe had in September laid the foundation stone for India's first high speed rail project between Mumbai and Ahmedabad. "The bullet train project, launched with much fanfare, is sadly an exercise in vanity and will not benefit either 6.5 crore Gujaratis or the nation," Singh said. "Rs 88,000 crore through a soft loan may seem like easy money, but it still needs to be repaid to the Japanese.

Gujarati entrepreneurs know very well that if a deal is too good to be true, it probably is not," he said. The government should have rather focused on the existing passenger rail network, the Congress veteran said. "At a time when the economy has slowed down considerably, despite favourable global macroeconomic conditions, the fear of tax terrorism has eroded the confidence of businesses to invest," Singh said. "As you know, the growth in private investment is at a 25-year low. This is terrible for India's economy."

Taking on former prime minister Manmohan Singh for calling demonetization an "organised loot", Finance Minister Arun Jaitley said today it was an "ethical drive and moral step" while the "loot" happened under him in 2G, CWG and coal block allocation scams. The demonetization decision has led to a larger formal economy, cleaner economy and bigger tax base, Jaitley said, asserting that the government strongly stands by its decision a year after it made the "historic" announcement, marking an "watershed moment" for the economy.

At a BJP press conference, Jaitley said the party has a different perspective than the Congress on the issue of ethics, as its priority is to serve the nation while for the opposition party it is about serving the family. On a day Singh launched a withering attack on the government over demonetization, saying it had harmed India's image, Jaitley asked him to compare pre-2014 and post-2014 reputation of Indian economy. "You were being considered an economy impacted by policy paralysis... You were off the global radar. Today, there isn't an international agency which does not eulogise the kind and quality of structural reforms India has taken," Jaitley said.

There was an ethical and moral rationale behind the note ban decision, he said, hitting out at Singh over his loot comments.

"Anti-black money drive is an ethical drive. Anti-black money step is a moral step. What is ethically and morally correct has to be politically correct. The loot had happened in 2G, CWG and coal block allocation," he said. Listing out measures taken by the government to curb black money and corruption, he said Prime Minister Narendra Modi had undertaken a transformation of economy with "structural reforms". After coming to power, the BJP believed that it was most urgent to "shake up" the status quo. Excessive cash transaction was leading to tax evasion and honest tax payers suffered "double whammy" as they ended up paying taxes for evaders too, the finance minister said. demonetization is not a solution to all problems but it has changed the agenda, ushering in less-cash economy, increasing numbers of tax assessees and squeezing terror funding.

Data mining has led to identification of 1.8 million bank account holders with disproportionate income, he said. "The Congress has a history of not taking one big step against black money. We are more than satisfied with the direction we have gone (in)," he said. He parried a question about Raghuram Rajan's reported stand against demonetization when he was the RBI governor, saying he would choose not to answer it as he does not find it necessary to disclose all the facts he as a finance minister is privy to.

To another query, Jaitley played down the political significance of Modi's meeting with ailing DMK patriarch M Karunanidhi in Chennai yesterday, saying political and social courtesies exist irrespective of political alliances. The Congress has sought to corner the government over demonetization and decided to observe 'black day' tomorrow on the first anniversary of the decision which invalidated 86 per cent of the currency in the system.The BJP has announced it will celebrate 'anti-black money day' tomorrow, with its leaders fanning out across the country to highlight the "successes" of demonetization. Calling note ban a "reckless" exercise, Singh said during an interactive session with businessmen in Ahmedabad that "demonetization was an organised loot and legalised plunder".