Former Prime Minister Manmohan Singh, a globally respected economist, on Thursday called the demonetisation drive a case of "organised loot and legalised plunder", warning that it will drag India's GDP by 2 percentage points.
The scathing criticism from the Congress leader, who opened up India's economy in 1991, invited a rebuke from Finance Minister Arun Jaitley who alleged that most black money was accumulated in India from 2004 - 14 when Manmohan Singh headed a coalition government.
The former Prime Minister, a front bencher in the Rajya Sabha, made a rare speech in the House to talk on the government's move of spiking 500 and 1, 000 rupee notes and how it was going to impact India's economy.
"The national income, that is the GDP of the country, can decline by about 2 percentage points as a result of what has been done.
This is an underestimate, not an overestimate, " said the Oxford - and Cambridge - educated economist.
"What has been done can also weaken and erode our people's confidence in the currency system and in the banking system.
"It is no good that every day the banking system comes up with new rules.
It reflects very poorly on the Prime Minister's Office, the Finance Minister's Office and the Reserve Bank of India, " said the economist who has also served as an RBI Governor.
As the man of few words spoke for about seven minutes, a hushed Rajya Sabha listened quietly with Prime Minister Narendra Modi and Jaitley also present.
There were loud cheers from the Opposition benches and some from the treasury nodded their heads.
"In the process of demonetisation, monumental mismanagement has been undertaken about which there are no two opinions in country as a whole, " he said.
"It is a case of organised loot and legalised plunder.
It is not my intention to pick holes.
I sincerely hope the Prime Minister, even at this late hour, will find a solution. "
Manmohan Singh's worries come against the backdrop of a host of economists, experts and think tanks revising downward their growth outlook for India, with the most pessimistic forecast being a mere 0. 5 per cent growth by Ambit Capital for the six - month period ending March 31, 2017.
The Indian economy had expanded by 7. 2 percent during the third quarter ended December 31 of last fiscal year and by 7. 6 per cent for the year as a whole.
The former Prime Minister wondered if the government was aware of the extent of hardship that demonetisation had caused to small businesses, the common man and the rural economy.
He reminded the government that 90 per cent of the work force was in the informal sector and 55 per cent of those in the agriculture sector were in distress now.
"The cooperative banking sector, which is serving a large number of people in the rural sector, is not operational.
The way in which demonetisation has been implemented will hurt agriculture and small industries. "
He also quoted John Maynard Keynes to counter Modi's appeal to the people to bear with him for 50 days.
"Those who say demonetisation is good in long run should recall the quote: 'In the long run we are all dead'. "
The government returned the criticism and targeted Manmohan Singh and his tenure as the head of a multi - party government led by the Congress.
"It is disappointing to hear from people who were in charge of the government when the most black money was generated, most corruption scandals came to the fore, " Jaitley said, referring to the financial scams that emerged during Manmohan Singh's rule.