In Speech, PM Narendra Modi Defends Notes Ban, But Critics Say Hard Facts Missing

New Delhi: Prime Minister Narendra Modi, in his second televised address since November 8, today defended his decision to demonetise the country's highest-value currency bills.

PM Modi described the gigantic demonetisation drive, which withdrew 86 per cent of the currency from the system, as "a historic purification ritual" to cleanse the system of tax evasion and corruption. "This will play an important role in changing the direction of the nation in times to come," he said.

The PM also used his 45-minute-long speech to announce financial assistance to groups that will be key in the upcoming and crucial election in Uttar Pradesh.

The speech came weeks before the government is expected to announce its annual budget, probably in February, and ahead of the model code of conduct, which will kick in as soon as the dates for the Uttar Pradesh election are announced, and prohibits any announcements that could influence voters.

PM Modi offered a 4 per cent discount on interest rates for home loans for up to 9 lakh rupees taken out in 2017 in urban areas and said rural housing will be expanded by 33 per cent. He also said the government would increase credit guarantees for small businesses and provided additional incentives for digital transactions.

Reducing the interest on certain loans for agriculture will be welcomed by farmers, a key constituent of the Uttar Pradesh election.

The withdrawal of 500- and 1,000-rupee bills on November 8 caused widespread disruption owing to India's near-complete dependence on cash transactions, and this evening's televised speech was seen as an opportunity to offer financial relief to people suffering most.

But critics said the PM had failed to disclose crucial information like how much of the abolished currency (which totaled about 15.5 lakh crores) has been returned, or the amount of new notes that have been made available. "Disappointed with PM's speech, many questions were left unanswered. His decision paralysed economy; country can't run this way," tweeted Randeep Surjewala of the Congress. Opposition leaders said that PM Modi, who had asked for: just 50 days" to resolve the cash crisis, has failed to meet his deadline, which expires now. "Financial Emergency continues in the name of black money cleanup. Money not available in banks. Still no concrete solutions to problems," tweeted West Bengal Chief Minister Mamata Banerjee who has played a pivotal role in the opposition's attack on the PM within and outside parliament.

Though the long lines at banks have thinned out in recent days, the new notes remain in short supply and experts say only about 40 per cent of ATMs are working.

Analysts have forecast that economic growth will be hit this quarter as a result. But the government is confident that  long term gains will outweigh the short term pain and has repeatedly stressed that the PM's radical decision was aimed at banishing the shadow economy, boosting taxes, beating corruption and moving towards a cashless society.

"In this fight against corruption and black money, it is clear that you would like to walk shoulder to shoulder with us (the government)," PM Modi said, speaking first in Hindi and then in English. "For us in government, this is a blessing."

The Prime Minister, who swept to power in 2014 on the back of promises to root out graft, said the authorities would continue to stamp it out. "Serious offences by bank and government officials have come to light. No one will be spared," he said.