THE winter session of parliament began on November 16. The government’s recent decision to withdraw Rs 500 and Rs 1,000 notes from circulation rocked parliament for the first three days. On the first day, the Lok Sabha was adjourned after obituary reference as a sitting member died in the period between two sessions. In the Rajya Sabha, a motion was moved to suspend whole business of the day to take up discussion on the issue of demonetisation of high-value banknotes. CPI(M) leader Sitaram Yechury took part in the discussion.

The next two days, the Lok Sabha witnessed disruption after the rejection of an adjournment motion plea by the Speaker. The opposition parties insisted on a discussion on demonetisation under a rule which entails voting and through adjournment motion that implies suspension of all other businesses. But the government was ready to go for discussion under a rule where there is no voting. The Rajya Sabha was also disrupted for two consecutive days over the remark of the Leader of Opposition that “when a Hindu asks questions (to the government), he is (termed as) anti-national; when a Muslim asks, he is labelled as Pakistani”.

Speaking on the demonetisation issue in the Rajya Sabha, Yechury said the reality today is very harsh. The government is either not aware of the situation the country is going through or is ignoring the reality, further adding to the woes of the people. In 1978, there was demonetisation of Rs 1,000 notes. But in those days, Rs 1,000 note was not in daily circulation. Today, Rs 500 and Rs 1,000 notes constitute 86 per cent of cash transactions in the country. What is being called demonetisation, which is withdrawal of these banknotes, has affected agricultural labourers and daily wage earners. Fishermen are suffering. Farmers are forced to sell their produce at lower price to private parties due to closure of procurement by the administration. 4,000 trucks carrying fruits and vegetables are stranded on Delhi-Kolkata national highway.

The prime minister is saying “if you do not have paper, use plastic”. What is the coverage of plastic money? Only 2.6 crores out of 113 crores of Indians have got a credit card. There are just 14 lakh card readers in retail shops and outlets for 113 crore people. Will that run our economy? Eighty per cent plus is a cash economy in the country, which is called the payment and settlement system. From truck drivers to fishermen, daily workers, agricultural labourers and farmers, everybody is suffering. The banks are issuing new Rs 2,000 notes. But nobody is willing to accept it because they can’t provide change due to shortage of notes of lower denominations.

It has also affected tea garden workers many of whom have anyway committed suicide due to economic distress. In Assam, there is a by-election. So, for the Assam tea gardens workers, the central government has given an exemption, but not for Bengal and Darjeeling tea garden workers. This should be investigated, he demanded.

On November 8, a few hours before the prime minister’s announcement, one crore of rupees in 100 packets of Rs 500 and Rs 1,000 notes was deposited by the local BJP unit in the Indian Bank branch on Central Avenue in Kolkata. It must be investigated.

BLACK MONEY

The prime minister mentioned four objectives of the move. One of them is controlling black money. As per the World Bank’s latest figures, 20.7 per cent of the Indian economy is in the black economy, that is, more than one-fifth of our economy. No doubt, this has to be controlled. But then, where is this black money? All estimates say that six per cent of this black money is in cash, and people who generate this black money are not misers. They do not keep their black money stacked under their beds. Their black money is in circulation. Their black money is in real estate, and, now when 500 and 1,000 rupee notes are not there, there is a Rs 15,000 coin, that is a gold coin, and gold imports have surged in the past few days. As per one estimate, it has nearly tripled. It was this very Prime Minister who had told the whole country that ninety per cent of the black money generated in our country is lying offshore and is lying in tax havens. The Swiss authorities say that they have given a list to this government. But the government says it cannot publish it because of legal issues. It is like the Prime Minister is clearing a pond to kill crocodiles, forgetting that crocodiles can survive on land also. The big crocodiles have survived and the small fish have died. As per reports in today’s papers, the State Bank of India has “waived” Rs 7,000 crore from its Non-Performing Assets on account of loans that were not being returned. It says that between 2014 and 2016, these NPAs have trebled in many cases. The point is black money problem is not going to be solved by this.

COUNTERFEIT NOTES

The second objective is eliminating counterfeit notes. Last year, the Indian Statistical Institute, Kolkata had done a study that out of the total money in circulation, 0.028 per cent or Rs 400 crore is counterfeit currency. For that, the government had to do something like that, burdening crores of our people! What is the guarantee that counterfeit currency would not come for 2,000-rupee note? We have already been shown one in Bangalore for this 2,000-rupee note. This is not the way to stop counterfeiting of currency notes. We want to stop counterfeit currency. Locate these and their source, stop them. Punish those involve in it. Give them a deterrent punishment so that others don’t follow them. But this is not the way to stop it. That claim is also a bogus claim.

TERROR FUNDING

The third claim that has been made is that it is being done to fight terror funding. After 26/11, in this House we went on debating over a new law to combat terrorism. Bulk of terror financing is done through electronic transfers. Terror funding has to be stopped and, if that has to be stopped, electronic transfers must be monitored properly and then the source should cut off. Many countries in the world have done it. There are the United Nations charter and a resolution on how to stop terror funding. The government must follow those.

CORRUPTION

Finally, it is corruption. As far as stopping corruption is concerned, the government is looking only at its demand side. In the balance sheets of corporate accounts, you have this for ‘services rendered’ to siphon off big commissions. That is corruption. But when a petty fellow gives ten rupees for something, that is corruption which the government wants to catch. But what about the big fish? Unless the government tackles the supply side of corruption, corruption in this country cannot be stopped. Corporate funding of all political parties should stop. Let the corporate funds go to the Election Commission or the government of India. The second thing is, add the expenditure of political parties along with candidates under the ceiling. Political parties spend what they want and how they want. Where have we reached? With a corporate name on the plane, the Prime Minister-elect can go for election campaign. Hundreds of helicopters are employed. Everybody says that it is party fund. Where is that money coming from? So, stop that.

So, none of the four points that the prime minister has mentioned stand on any sound footing. So, if these objectives are not to be fulfilled by this, what is the meaning of this move?

The Kerala chief minister is here. He has called a meeting of all members of parliament. The government has allowed the banks to accept old currency notes and give change. But, what about district cooperative banks? Bulk of the people and bulk of Indians today are in rural cooperative banks. But, the government doesn’t allow cooperatives to replace notes. People are suffering and the suffering is increasing. It is a pitiable condition. Why are you agonising Indian people? Anyway, agonising is to convey, I mean, an idea or a notion that I control your personal life. I control your personal life and I control your existence. What is this but a fascist message?

In our rural areas, 80.8 per cent of the population is not covered by banking system. And, geographically, 93 per cent of the geographical areas in rural India are not covered by banks. There is a ‘Chamakta Bharat’ or a ‘Shining India’. For them, PayTM, for them e-wallets, for them all these things will be there but I tell you the percentage, what it means - a miniscule per cent. Whole of India, that is, Bharat is ‘Tarasta Bharat’. That does not have access to these banking facilities, does not have access to plastic money. It is a complete mayhem that the government has created.

Let there be a JPC probe. We would like to know what is the real motive of this government in doing this. Before every Parliament session, something like this is done so that Parliament discussion is entirely derailed. We cannot talk about what is happening to our people, how they are dying out of hunger now. Judicial appointments and many other important issues are there. The government just hijacks the whole thing away like this! Our demand is till alternative arrangements are in place, allow these notes to be transacted for all white transactions at public utilities and public purposes. This facility that has been given to the nationalised banks and central banks, etc, should be extended to rural cooperative banks with immediate effect.

During Sitaram Yechury’s speech in the Rajya Sabha on November 16, the finance minister intervened on the issue of the “write offs” of non-performing assets and FCRA.

Yechury, rebutting the misleading claims made by the finance minister regarding the two issues has given the following clarification on November 17.

ON LOAN WRITE OFFS

During my speech on the demonetisation issue in the Rajya Sabha, when I raised the issue of Rs 1,12,078 crore of unpaid loans being written off in FY 2014-15 and FY 2015-16, the finance minister intervened to say that these "write offs" are merely an accounting entry. He went on to add that this means that the bad loan is taken off the books of a bank, but the banks will still attempt recovery of this money. This gives an incomplete picture of the real situation.

What does taken off the books mean? It means that the banks do not attempt to recover this because it does not effect their balance sheets any longer.

The minister also added that a write-off means that the loan from a performing asset, it becomes a non performing asset. This is incorrect as it is non-performing asset which is written off; the rules for conversion of a performing asset to a non-performing asset are clearly stated by the RBI in its master circular (particularly, sections 3.5, 5.9 and 5.10 of Master Circular on "Prudential Norms on Income Recognition, Asset Classification and Provisioning - Pertaining to Advances"). The minister may like to check his facts on this count.

 Getting back to the issue of write off, in a letter to The Indian Express newspaper, the RBI itself had clarified that the total write-offs includes – I repeat, only includes – a large portion of technically written-off accounts where the recovery efforts continue as usual. But as RBI’s former deputy governor KC Chakrabarty has noted, after a technical write-off, when the bad loan is no longer on the books, there is no incentive for banks to pursue recovery.

 As far as tall claims of this government for recoveries of written off loans go, the facts speak for themselves. The conviction rate of wilful defaulters under this government was 1.14 percent in 2015-16, even lower than 1.45 percent in 2014-15. So much for the finance minister’s talk of written-off loans being recovered from willful defaulters by his government.

The finance minister may like to check his facts and tell the country how much of the "written off" loans has his government recovered. If not, written off loans are not just technical, it is real money of the people being given by the government to crony corporates.

If the government is really serious in recovering these loans why are they not confiscating the properties and returning these loans that are people’s savings to the nationalised banks?

ON FCRA

During my speech on demonetisation, the finance minister intervened to explain the amended Foreign Contribution Regulation Act (FCRA), 2010 as a mere "technicality", and not having any effect on the funding of political parties. This is yet again, a sleight of hand.

The FCRA was amended from retrospective effect not by introducing and debating a bill in parliament. The government, instead, brought an amendment to FCRA in February 2016 through the 2016 Finance Bill to avoid scrutiny. It amended Section 2(1) (j) (vi) of FCRA, 2010, by adding a proviso with retrospective effect. The Representation of People's Act bars political parties from receiving foreign funds, but after this amendment, they can receive funding from foreign donors which will bypass government scrutiny.

The amendment was brought in retrospectively because the ruling party was charged with illegally receiving foreign funds for political activities from UK based Vedanta Group from 2004 to 2012, thereby violating FCRA provisions. The case is still being heard in the Supreme Court.

After the amendment, a foreign company - often foreign multinational giants - through their Indian arm/entity (where they may have more than 50 percent Indian holding) can fund Indian political parties. Effectively therefore, foreign companies can fund Indian political parties, through this arm. This raises serious concerns about circumventing the Representation of People's Act for foreign funding of Indian political parties