Prime Minister Narendra Modi will be holding a Cabinet meeting on Thursday to possibly discuss the 200 per cent tax that has kept away demonetised Rs 500 and Rs 1000 currency notes from beign deposited in the banking system.
The meeting comes reports surfaced that high tax penalty has scared people from depositing their cash into the banking system. Sources told the Indian Express that the government wants all the demonetised currency notes to be deposited in banks instead of being burnt or destroyed fearing penal action.
The Income Tax Department had earlier warned that those who deposit cash above Rs 2.5 lakh would face tax plus a 200 per cent penalty in case there is a mismatch of income. The announcement seems to have terrified people who reportedly destroyed the banned notes.
According to sources quoted by the daily, the government may decide on a deposit scheme or an instrument like bond where the cash savings in the demonetised currency could be deposited.
Meanwhile, former Prime Minister Manmohan Singh on Thursday said that "monumental mismanagement" has taken place in Modi's process of demonetisation.
Singh spoke about the issue in the Rajya Sabha and said: "It is important to take note of the grievances of the people's suffering... Fifty days is a short period but for those who are poor, even 50 days can bring about disastrous effects. About 60-65 people have lost their lives. What has been done can weaken and erode our people's confidence in the currency and banking system."
He added that "the way demonetisation has been implemented will hurt agriculture, small industries and the people in the informal sector. The national income can decline by about two percentage points... I feel that the Prime Minister must come up with some constructive proposal on how we can implement the scheme."
Singh, also a respected economist, quoted Keynes and said: "Those who say demonetisation is good in the long run should recall quote 'In the long run we are all dead'."
Here are the updates:
3:09 pm IST: Rajya Sabha adjourned till 11 am on Friday, November 25, following uproar over PM's absence.
3:05 pm IST: Congress leader Anand Sharma says that the opposition parties are adamant on their demand that the PM be present in the House.
3 pm IST: Winter session in Rajya Sabha resumes. The Central government requests for discussion to begin adding that the Prime Minister will intervene.
2:15 pm IST: "The main demand of the opposition was that the Prime Minister be present in the House. We accepted that demand. But, the opposition is now just looking for excuses," Finance Minister Arun Jaitley told reporters after the Upper House got adjourned till 3 pm following huge uproar over PM Modi's absence.
Jaitley slammed the opposition parties for claiming the demonetisation to be a blunder by the Modi government. "Don't they think Commonwealth and 2G was a blunder? Their government had the most scams and black money generated during its tenure — 2G scam and coal scam. Everything happened during their government. Those parties who were once a part of every scandal in the country are now opposing demonetisation. Those who didn't consider scandals to be a blunder, they are considering demonetisation to be a blunder," the Finance Minister said.
"During the discussion, we realised that the opposition is not prepared at all. They just want the Prime Minister to be present during the discussion. There was mostly noise and no substance in what the opposition has been saying," he added.
2:13 pm IST: Rajya Sabha adjourned till 3 pm.
2:11 pm IST: The members of the opposition parties gathered in the well of the House demanding the Prime Minister to be present in Rajya Sabha and listen to what everyone has to say.
"Bhag gaya bhai bhag gaya, Pradhan Mantri bhag gaya!" angry MPs shouted in the well of the House.
2:09 pm IST: "We were told that the Prime Minister would stay for the discussion and would even answer our questions. I want to find out: Will the Prime Minister come or not?" Leader of Opposition in Rajya Sabha Ghulam Nabi Azad said.
"The government has been asking this House to continue the discussion which began on the first day. I had my doubts that the Opposition is trying to run away from this debate. And this is only a new way of running away from the argument," argued Finance Minister Arun Jaitley.
2:01 pm IST: Winter session in the Rajya Sabha resumes after lunch. BSP chief Mayawati is speaking. Prime Minister Narendra Modi not present in the House. Huge uproar due to his absence.
1 pm IST: Rajya Sabha adjourned for lunch till 2 pm.
12:55 pm IST: "This is a people's movement and you cannot suppress the voice of the people. Anyone who opposes your move is not anti-national. Why are you making this an issue? You are some messiah and we are some devils? Put Mamata di in jail if you want. Try it!" a dramatic O'Brien says in Rajya Sabha.
12:51 pm IST: "Your poll says 92 percent are happy. Which 92 percent are happy? Who are you keeping happy? Before being in a cashless society, you can't be in lu-lu land. You have made 24 changes since this implementation was made," O'Brien says in the Rajya Sabha.
12:48 pm IST: "Secrecy cannot be the excuse for keeping people in pain. Ninety percent of debit cards are not used to buy anything. They are used to withdraw money from the bank," O'Brien said.
12:46 pm IST: "Mamata Banerjee called this the big black scandal," O'Brien added.
12:43 pm IST: "Everyone is against black money and corruption," O'Brien said. "By demonetisation, it is only one part of a larger step. What are you doing to electoral reforms? Eighty percent of donations received by political parties are by unknown sources. Six percent is the black money composition in cash," the TMC MP added.
12:41 pm IST: "Mamata Banerjee reacted with all the wisdom of an economist who perhaps has never done a PhD in economics. Trinamool means grassroots. On November 16, the Trinamool Congress went to the President and tried to highlight this issue," O'Brien said.
12:40 pm IST: "Some people have quoted Bob Dylan. The people who quoted Dylan have also conducted surveys on mobile apps to say 93 percent people are happy with demonetisation," Trinamool Congress MP Derek O'Brien said in Rajya Sabha.
12:15 pm IST: "Those who say demonetisation is good in the long run should recall quote 'In the long run we are all dead'," Singh concluded his speech.
12:13 pm IST: "It is not good that every day, the banking system comes up with some modifications. That reflects very poorly on the Prime Minister's Office. I am very sorry that the RBI has been exposed to this kind of criticism which is fully justified," Singh added.
12:12 pm IST: "In my opinion, the way demonetisation has been implemented will hurt agriculture, small industries and the people in the informal sector. The national income can decline by about two percentage points... I feel that the Prime Minister must come up with some constructive proposal on how we can implement the scheme," the former Prime Minister said.
12:11 pm IST: "I want to know from the prime minister the names of countries where people have deposited their money in banks but are not allowed to withdraw it," Singh said.
12:10 pm IST: "Fifty days is a short period but for those who are poor, even 50 days can bring about disastrous effects. About 60-65 people have lost their lives. What has been done can weaken and erode our people's confidence in the currency and banking system," Singh said in Rajya Sabha.
12:08 pm IST: "I do not disagree with the objectives of taking steps against terrorism and black money. In the process of demonetisation, monumental mismanagement has taken place. Today, there are no two opinions in the country. It is important to take note of the grievances of the people's suffering," former PM Singh said.