“Now, the challenge is how quickly the old notes will be replaced by new one. Empirical evidence tells unaccounted wealth is largely stashed away in construction, jewellery; don't know how much is in hard cash,” he added.
“We supported the decision yesterday but we will have to see if the objectives are achieved. Replacement of new notes with old notes must be done expeditiously with minimal problem to the poor, middle class people,” the former finance minister said.
“It was done before in 1978 but it was failed. Various government considered it but was dropped considering economic gains will be very small and inconvenience will be very large,” he said.
"I don't encourage or support unaccounted wealth or income, but there’s a non-monetised economy, you can't call it black money," he said.
Prime Minister Narendra Modi led NDA government on Tuesday scrapped the existing currency denominations of Rs 500 and Rs 1,000 to combat black money, corruption and terror-financing.
The move came as surprise for many and triggered a political controversy with Congress leaders accused Modi of acting like “Tughlaq”. “He is working like a modern day Tughlaq,” a Congress leader Manish Tewari said.
The Prime Minister, However, clarified that the move is to break the grip of corruption and black money. “We have decided that the 500 and 1,000 rupee currency notes presently in use will no longer be legal from Tuesday midnight,” Modi said.
A day after the notification, there are concern among people about replacing larger denomination banknotes for new ones once they expired.
Across India, serpentine queue of people were seen standing in front ATMs to withdraw/deposit money. Some were lucky, while some left in disappointment after ATM machines stopped working in many areas.
As per government directives ATMs will not function till November 9 and in some places till November 10. Exceptions have been made on humanitarian grounds at government hospitals.
The notes can be exchanged in banks and head post offices till December 30, 2016, by producing a valid identity card.
These notes can also be exchanged at a local Reserve Bank of India office till March 31, 2017.
Finance Secretary Ashok Lavasa, said, "The new high-security Rs 500 and Rs 2,000 currency notes will be available in all the ATMs across India from November 11 onwards."
“There will not be any problem as it will be available from Nov 11 in all ATMs. RBI to closely monitor fresh notes that would be issued. Cash withdrawal restrictions to ease once supplies of new Rs 2,000 and Rs 500 notes improve," he said.
Here is the latest update on Modi’s demonetisation policy a day after its implementation.