DeMo has hit India at both macro and micro levels: Amit Mitra, Finance Minister, West Bengal

Now from macro, let us come to micro. Go to Surat. One lakh jobs lost only in weaving. Can you imagine that they are selling off 95,000 machines as scrap? What does that mean to you? Go to Tiruppur, 40 percent loss in business. Go to Ludhiana, go to Moradabad, go to Agra, go to Meerut. Same story. So whether it is at the macro level, a reduction of growth rate or at the micro level.

Now, take the informal sector which we are not accounting for. Centre for Monitoring Indian Economy (CMIE) has said 15 lakh jobs have been lost in four months. But, do they have the data for the informal sector which is 40 percent of gross domestic product (GDP), 80 percent of employment? Informal sector has been shattered. Now if this is what the BJP thinks is great, they must be out of their minds. They know it in their hearts that this is a black day. What they did was a tsunami on the people of India. Calling it watershed, it is a tsunami.

Q: You are saying that it is a black day. The Defence Minister, Nirmala Sitharaman, suggesting that those who are observing this as a black day are supporters of black money. We are celebrating this as an integrity day. That is the government's pitch and campaign.

But let us look at the narrative from the government. The argument is that you cannot look at demonetisation as one step alone in isolation. It must be seen within a package of a series of measures. Demonetisation started it, but it has been followed through with other measures including legislative action, for instance the crackdown on benami properties, the crackdown on shell companies, the insolvency code and now, they have added recapitalisation to it as well. So you are missing the woods for the trees by merely looking at demonetisation in isolation. That is the government's argument against yours.

A: I would like to make two points. First of all, whoever did demonetisation of this scale? Gaddafi did. In Soviet Union, before it became Russia, twice it did. And Nigeria did. Is that the example India is going to follow, all dictatorships? Number one. Number two, please give us evidence of how many companies have they managed to catch in thousands or millions. They are only talking and they will go to court, this will carry on, this is all a sham.

In fact, some people are even suggesting that perhaps somebody knew that this is a methodology for a large number of people to convert black into white which is exactly what they are saying has happened. Now if they did not know this that if you set up this structure, black will be converted to white by many people which they are saying today. So where is that policy factor?

Today, the Indian economy is down in the macro dumps, micro level shaken and every economist in the world, from across the world had said at that time. So therefore, this is a systematic process of undermining the poor people, the informal sector, the common people, the small and medium enterprises which provide you the jobs. So what are they talking about? This is all in paper. Structural change? Yes, structural change to bring a tsunami on the people of India. Everybody understands it. They may say whatever they like. People, in their hearts, know. Mamata Banerjee said it on the very first hour. Many people have reverberated her perspective in different ways.

Q: You are calling it a tsunami against the people of India. Well, so far the voters have voted for this government and the government hopes that that will continue even in the state elections. But, let us talk about the macros since that is what you brought up. The government is now grudgingly – and I use that word very carefully – grudgingly acknowledging the fact that there has been an impact on growth. They call it hardships.

But let us look at all the estimates. At least 0.8-1 percent including members of the Prime Minister's economic advisory council who have spoken on the channel believe that that has been the hit as far as growth is concerned. The Finance Minister and the Prime Minister believe that this shock therapy was needed for more formalisation of the economy, for greater transparency. They clain that the outstanding cash in the economy is down by about 20 percent and thus, less cash floating around means less tax evasion. It means better compliance. It means more people coming into the tax net. So you have to look at all of this with a long-term perspective.

So let me then ask you, do you believe that the short-term pain which is the government's argument that look, we had to face the short-term hardship, short-term pain to reap the benefits in the long-term. Do you buy that?

A: All this is talk. You and I, all know that there are three kinds of black money. Two of them are in stocks, not in flows. One is the question of cash. Second is question of gold. Third is question of real estate. Fourth is international black money in safe havens. Demonetisation, even at a small scale over long periods of time may address one part of the four. Now, what have they done with the other three?

The Honourable Prime Minister now, during election campaign said I will bring back all the black money from abroad and every person will get Rs 15 lakh into their bank accounts. What happened to that? He also said that give me just 50 days, he begged. And I will correct everything. It has been 365 days. Nothing has changed. This is a failed government.

Yes, there is awe and shock to undermine the interests of the small business, the interest of the informal sector and interest of the consumer who, in the process, suffers hugely. So what are they talking about? Where is the money from abroad, so called Swiss banks and safe havens? Where is the gold money in black? Where is the real estate in black? Economists talk about this. Where is all that? So only cash.

Q: Let us talk about the way forward. Demonetisation is done. We can continue to analyse the implications of it. As you pointed out and as many have said, the government changed its narrative, but be that as it may, let us talk about the issue of corruption. We did a pole with local circles recently which clearly highlights that people continue to bribe officials at the state level, that local corruption is the biggest scourge at this point in time. What are state governments doing, individual states like yours, to ensure that at the level of the 'aam aadmi' the curse of corruption is removed? Give us an example, for instance, at the level of West Bengal, because the survey clearly shows that even in a state like West Bengal, the numbers do not look good.

A: I completely agree with you. States should be doing. Let me give you an example of West Bengal because I have limited myself to West Bengal for the last six years, 93 million people. What did we do? First, we made value added tax (VAT) registration electronic with digitised signature. Do you know that the government of West Bengal gives the businessman back demat certificate with digitised signature? Has anybody done it?

Now, we have got the four highest awards from central government, golden peacock for e-taxation, financial management system. Do you know there is not even Rs 1 in West Bengal can be spent in cash or in cheque from the treasury? Entire treasury works on digitised process. Now people talk about digitisation. States are coming to West Bengal to study how this digitisation of government services in terms of transparency and integrity. You will ask, proof of the pudding should lie in the eating. Exactly. Rs 21,000 crore of taxation when we came to office. Rs 43,000 crore in four years, double and it is growing.

This is what is this whole question of service to the people, transparency, integrity and anti-corruption move is about. Let the central government give this example. Learn from West Bengal. And I am sure there are other states. We are competing with, for example, Karnataka. They have sent a team here, we have sent a team there. Odisha has come to us and looking at this. So states are collaborating today with the highest level of transparency. Why do they not recognise that? They give us an award four times, but they do not recognise that states are ahead of the centre. That is my answer to your question.

Q: Let me ask you about the goods and services tax (GST) because the TMC, in fact has been one of the most vociferous supporters of the GST, but today, you have turned into the biggest critiques of the government calling it the great selfish tax. So far, within the GST Council, the decisions have been by consensus, there has been unanimity despite the political boundaries outside the council. Is that likely to change now because that is the fear?

A: First of all, you must know, and I am sure you do, that our party in 2009, in the manifesto said, we support GST in principle. It was our party which held the Kolkata meeting of GST of empowered committee, there was no GST Council at that time which brought about a consensus, in principle. What happens in fact? In fact, I have written a letter to the Honourable Finance Minister showing exactly what is wrong and on the end of May, 2017, I had said in the GST Council, do not, by physical force, launch this on July 1. You are not ready. You have not beta tested the data. Only 200 companies per state when Rs 300 crore of invoices would be uplinked per month, can you imagine that?

Q: But what was there no dissenting note from you in the GST Council?

A: What I am saying is that they have made a complete mess of it. They introduced GSTR1, GSTR2, GSTR3A, then extending everything by three months, four months, this is all 'jugaad'. I had said this four months ago, if you recall in your show that this cannot be a jugaad system. World largest fiscal reform. Are you aware that in Malaysia, they have serious problems today? Have we learned from that? Canada, out of 10 states, five of them have adopted the system, five have not. We have to learn. We cannot do this by physical force. 'We took a review in the first week of June, start from July 1, forcefully.' Is that the spirit of governance?

Why am I opposing things in GST? One day, 26 laws that I suggested were accepted by the GST Council. That was sensible, but then the whole thing went into a tailspin because you want to do it by physical force. No advice, nothing. GST Network today, privately says we are not prepared. Now you go and blame Infosys? Did you not know what was the state of GSTN? Is this a government? Is this the way you run an administration? I have conducted reform at micro scale. I know how cautious I am.

Q: Let me then ask you to put on your economist hat. Do you believe that the worst is behind us? The government says growth has bottomed out and we are not going to see an uptick from here on. Is that the sense that you get by what you see on the ground? In your state for instance, do you believe we are now headed back towards the 7 percent plus kind of growth trajectory?

A: This is complete propaganda. This was said after the demonetisation of 50 days, it was said we are back on track. What happens? Q4, you get 6.1 percent growth. Again you say no, this will be all okay from April-June. What happens? You get 5.7 percent growth. What happens to the process of the informal sector? Nobody answers. What happens to small industry? There are no answers. Do not forget, small industry is a value chain to big. If the small industry and vendors do not work, big cannot work.

So my submission is, let us first accept this and revenue secretary had said it one day in the GST Council meeting. Let us first accept the problem. The problem is serious. It has hurt the people. It is hurting people. We must correct it and GST is a complete Pandora's box that has been created which is written in my letter to the Finance Minister. I am not saying it to you, I have put it in writing.