NEW DELHI: The Central government’s demonestisation drive has created significant disruption throughout the economy and threatened economic output as it has virtually collapsed some of the sectors, said a parliamentary panel.
The Committee on Subordinate legislation in its report tabled in Rajya Sabha expressed its anguish that such a major exercise has been carried out without any adequate survey or research on the needs of the different sectors of the economy.
It said that the main object behind cancelling legal tender character of Rs 500 and Rs 1000 notes on November 8, 2016 was to eliminate black money and to curb the infusion and circulation of fake currency notes.
“It was an effort to combat corruption, tax evasion and counterfeiting and eradicate black money. However, the Committee realizes that inevitably, it is the low-income and rural households who have been hardest hit by the currency reform. Demonetisation has weighed heavily on the country’s manufacturing sector,” said the committee.
It further said that the government took steps to mitigate the effects, it cannot be ignored that it created significant disruption throughout the economy and threatened economic output.
The committee was of the view that the Ministry of Finance and The Reserve Bank of India should hold discussions with the affected parties and provide support to sectors that virtually collapsed during the demonetization process are recovered fully in due course.
Acknowledging that corruption is a problem but committee said that in the process honest, hard working and taxpaying citizens of India were made to suffer.
“The solution lies in simplification, rationalization and reduction in taxes, cutting regulations and curtailing officials’ discretionary powers, eliminating loopholes and widening the tax net,” it said.
The committee also felt that tackling black money require immense political will and legal and diplomatic heavy-lifting and hoped that the government would meticulously follow up its demonetization move.