The decision to demonetise Rs 500 and Rs 1,000 notes was meant to clamp down on black money and terror financing but honest taxpayers were hardest hit, according to a Parliamentary panel report tabled in Rajya Sabha on Monday.
“Honest, hardworking and tax paying citizens of India were made to suffer,” the Committeee on Subordinate Legislation said in its report. Inevitably low income and rural households were hardest hit by the currency overhaul, it said.
The note ban “weighed heavily on the country’s manufacturing sector” and the Finance Ministry did take steps to insulate the sector, the Committee led by Congress leader T Subbarami Reddy said. Demonetisation created significant disruption and threatened the economic output, it added according to a report in Business Standard.
The panel said as the country relies majorly on cash, the impact of demonetisation was far greater than anticipated. Even though efforts were made to bring in cashless transactions, people using digital banking for money transaction weren’t many. As a result, trade and consumption levels were hit hard, the panel said.The committee has recommended the Finance Ministry and Reserve Bank of India to deliberate with parties affected by demonetisation and provide support to sectors which almost collapsed because of the move.