New Delhi, Feb 8: While replying to the debate on motion of thanks to President in Rajya Sabha today, Prime Minister Narendra Modi launched a blistering attack on Congress. Modi attempted to dwarf former Prime Minister and late Congress stalwart Indira Gandhi, by alleging that fear of electoral setbacks deterred Iron Lady from implementing the demonetisation drive. Also Read - Happy Birthday Narendra Modi: Kangana Ranaut Prays For Prime Minister’s Long Life in a Video

Modi cited former bureaucrat Madhav Godbole to prove that demonetisation was suggested to Indira in 1971, but she dismissed the idea saying, “Are no more elections to be fought by the Congress?” The disclosure was made by Godbole in his book Unfinished Innings: Recollections and Reflections of a Civil Servant. Also Read - PM Modi Turns 70 | From 70 kg Laddoo to Oximeter, How is How BJP Planning to Celebrate His Birthday

Modi recalled the fact that Justice Wanchoo committee had recommended Indira in 1970 to demonetise higher currency in order to curb graft and illicit trade. On being accused by Congress MP Anand Sharma of making defamatory remarks against Indira, Modi said, “I’m not saying this. Godbole ji said this. Why didn’t you file a defamation case against him?” Also Read - Prime Minister Narendra Modi Turns 70: A Look at Things Gifted to Him by Leaders Around the World

Did PM Modi level a fair allegation?

Godbole was the Home Secretary under Indira Gandhi government in 1971. In his book, Godbole dedicates a chapter My Years with YB Chavan. Chavan was the then Finance Minister. Godbole claims that Chavan had approached Indira with the recommendations of Justice Wanchoo Committee report. However, she refused to implement the measure. Modi quoted Indira correctly in his Rajya Sabha speech, as per the book. “Are no more elections to be fought by the Congress?”

Why Iron Lady was reluctant to demonetise currency

Indira Gandhi, revered for taking stern decisions during her era, remains questioned for backing down from demonetisation. From liberating Bangladesh to launching full-blown crackdown on Khalistani terrorism, Indira is credited for several valorous steps taken by the nation during her reign. In terms of taking unpopulist decisions, Indira did not refrain from imposing emergency across the nation in 1975.

However, when it came to demonetisation, experts opine that the nation was not in the appropriate condition to bear the brunt of note ban. In the backdrop of 1971 war with Pakistan, the Indian economy was decelerating at a rapid pace. The GDP had grown by a meagre 0.9 per cent. In Modi’s own terms, the timing of demonetisation is appropriate when the economy is not under strain. “When can you have an operation? When the body is healthy. The economy was doing well and thus our decision was taken at the right time,” Modi said in the Lok Sabha on Tuesday.

Secondly, the Wanchoo committee had recommended demonetisation at a time when Indira had nationalized 20 commercial banks, defying the apprehensions raised by her critics. She was under tremendous pressure to bring out positive results for the economy following nationalisation of banks. By implementing demonetisation, the economy would had further deteriorated.

Third, the cash-to-GDP ratio prevailing in 1971 was not compelling enough to implement the drastic step. The currency GDP ratio remained stable at 10.5 per cent. The rate was maintained throughout the period between 1970-80.

If economy was stumbling, why Wanchoo committee recommended demonetisation drive?

Wanchoo committee was constituted in 1970 by the Congress government with the intent to eradicate black money from the economy. The committee was also asked to recommend steps which could reduce graft and plunge loopholes in the system. In his report, Justice Wanchoo said, “Black money is like a cancerous growth in the country’s economy, which if not checked in time, will surely lead to its ruination”.

Demonetisation was one of the major suggestions made by Wanchoo committee to target the unaccounted wealth in circulation. The committee estimated the total amount of black money to be Rs 1,400 crore in 1968-69.

Apart from demonetisation, Wanchoo committee had also recommended the Indira Gandhi government to regulate donations to political parties, announce voluntary disclosure scheme, reducing maximum income tax from 97 to 75 per cent and imposing taxes on agricultural income.