 Hello and welcome to NewsClick. Today we are going to discuss Mr. Modi's claims that demonetization finished the black money economy, the parallel economy and has helped the Indian economy to grow. Foreigner, there are various claims made in that list. One was that the parallel economy was finished. And therefore, since all the money came back to the banks, therefore, it was actually finishing the black money. Now, if you remember the claims at that point of time which has been made, is that the black money will not come back to the system and therefore, they will actually be able to liquidate black money. Having failed in that, now this argument, sir, you know, the tails I win, heads I win kind of argument. What do you think about the state of the black money today? First, let us take a step back for a bit and look at exactly what Prime Minister Narendra Modi said. This was New Year's Day. He granted this interview to Smita Prakash of A&I. The interview lasted for more than an hour and a half, 95 minutes. The part on demonetization and black money was barely a few minutes. And importantly, no follow-up questions were asked. What Mr. Modi said was that it was not a jhatka. He said that the government had forewarned the people of this country a year ago that if you have black money, you can deposit this money. You can pay penalties on it and you will be helped out. You know, there was various schemes the government had, including the amnesty schemes. There have been various amnesty schemes. They also had one similar amnesty scheme. Then Mr. Modi said, however they thought, Modi too would behave like others. Prime Minister Modi loves to address himself in the third verse. So he kept saying, so very few came forward voluntarily. And then he added that there was a parallel economy running before the node bandhi happened, which had drained the country from the inside. And the currency, which used to be kept in SAC's body, they returned to the banking system. Now at best, this is a half truth. At worst, it's a down like lie. If you recall, on in November 2016, when dramatically demonetization was announced, he said this is going to clean the country of black money. At that time, it was believed that of the 15.3 lakh crore currency in circulation, a substantial amount would not return to the system. And that would be like a bonanza for the government. What is the fact? A year later, a little under a year later, or sorry, little under two years later, August 2018, the annual report of the Reserve Bank of India tells you that 99.3 percent of the total currency that was in circulation at that time. I want to stop you here. You know, the money came back and Reserve Bank had these figures actually after six to eight months. Every month, they were giving figures of how much money is in circulation. So obviously they got back, they had this amount. They delayed announcing this itself. One could argue that it was to help both the government out. But that apart, the threat, apparently, which was given as warning, was given to people who held black money. But the people who were affected were the people who were everyday users of money, not black money. And they were the ones whose money got wiped out. I couldn't agree with you more, more probate. What was supposed to be targeted against holders of black money? And you know, the discourse was in black and white. It instead became an attack on the people of this country and the most vulnerable sections of the people. You are entirely dependent on the cash economy. Senior citizens, women, children dependent on women, farmers, daily wage workers, small traders and shopkeepers, you name them. These were the most vulnerable sections of the economy and they were hurt the most. And Smita Prakash, she has not been happy that she has been described as a pliable journalist. She didn't mention about more than 100 people who died while they were standing in queue. Let's also look at it this way. If this much of money came back into the system, the banks, that means people were issued fresh notes in lieu of that or they can draw now money out of that. Two things I want to point out to you. One of it is that the money in circulation, that means money being held as cash, is actually more than before this was done. So if money transactions were to be affected, that's supposedly how black money transactions take place, then today there is more money in circulation, more potential for black money. With 2000 rupee notes, as you know, it makes storing of black money much more efficient. It's only now that the government is saying we're not going to print more 2000 rupee notes. The second part of it is, and I think that's an important issue as well, that if for instance you think that black money is the major issue in the economy, you have settled the black money in this way, isn't it that you helped all the people who held black money to make it white? Because that's what you really seem to have done. Effectively that's what's happened. All kinds of reasons were given for demonetization. Let's go step by step. In November 2016, it was said, okay, demonetization where overnight you, you know, 85, 86 percent of the currency in circulation is declared illegal. What do you do? It's going to dent the black economy. Two, it's going to prevent terrorists from using fake currency notes. And the third reason that was later given was that cash less, less cash society. Today we know that the minutes of the meeting of the board of the Reserve Bank of India, the same evening that demonetization was announced, the directors had expressed their skepticism about whether these very laudable goals would be achieved. That's point number one. The second point is, there is absolutely no evidence to indicate that India's so-called parallel economy or black economy has diminished in any manner. Number three, you know, at that time, if you recall, demonetization, you were allowed to exchange your old currency notes till the end, the last day of 2016. And less than two months later, the elections in Uttar Pradesh had started. And at that point of time, when the BJP won handsomely in Uttar Pradesh, they said, look, this is evidence of how ordinary people of Uttar Pradesh have welcomed demonetization. But I think there were many myths. At that time, there was speculation that this was essentially to immobilize the BJP's political opponents in Uttar Pradesh, Samajwadi Party and Bahujan Samajwadi. Secondly, Mr. Modi himself, he says, at that point of time, he says, hang me. He also said, he said, at the same time, today his intentions are being questioned. Why? It was today found that the brief period of time when cooperative banks were allowed to exchange the old illegal currency notes for new currency notes, there were two current state cooperative banks that received huge amounts of money, over 750 crore rupees in that brief period of time. And one of them, the Ahmadabad district cooperative bank, Mr. Amit Shah, the Bharti Janta Party president, was one of the directors. Now, this is more than enough circumstantial evidence to indicate that none of the laudable objectives of demonetization that were announced, and which were justified by the present governor of the Reserve Bank of India, Mr. Shaktikanth Das, and also justified by the present chief economic advisor that the other Dr. Subramaniam. But none of those objectives have been fulfilled. You know, I have to say that when we went to UP in that period, people were very unhappy with demonetization, but they also thought that if it is going to cost so much unhappiness for me, there must be something good that will come out for the nation. They are willing to give Mr. Modi at the time, the latitude of the benefit of doubt. Today, if we, and they are, you know, Indian people are not stupid. They know how much Black Money is still circulating, that's in front of them. They know how transactions are taking place in Black Money. All of this is not unknown to them. Therefore, the, you can see the credibility fall, which is taking place much later. It's not immediate, but after two years, people are now beginning to realize. And that's why in only one and half hours, it's only one and a half minutes, two minutes, Mr. Modi makes his claims about demonetization and you must remember that today the government is hardly raising this issue at all. It's only because Smita Ji had to show that she was not a client journalist that a question like this was raised. But there were no follow-up questions. There were no follow-up questions as to whether who had benefited or who had not benefited. And as you rightly pointed out, the elections in Uttar Pradesh were very, very close to the demonetization period. And people were willing to give in the vote today if they are not. Today, more than two years later, people have realized that in a situation where jobs are not being created, when the economy slows down, you actually make things worse. So the so-called great surgical strike on Black Money ended up being a surgical strike on the weakest sections of the people of India. It was not a vendetta against holders of bad money. It was a vendetta against the people of this country. And I think today Pradhan Mantri ka niyat ke upar sabaal othara hain. And us samae people were very charitable towards him. I think today they're not anymore. Thank you, Parujya, for being with us, explaining to us what the Black Money strike shall we say or strike against Black Money really has meant to the economy. We have not discussed its effect on the long-term, short-term economy because you've done it a number of times. But taking stock of the larger picture, we'll continue these discussions on the Indian economy, and particularly the Indian Black Economy news click further. Thank you very much. As the thanks, as events unfold. Thank you very much, Bhavid. This is all the time we have for NewsClick today. Do keep watching NewsClick and we promise to bring you many more episodes on these and other issues.