India

Demonetisation, brainchild of Modi government: RBI

New Delhi, January 10: The awe and shock of demonetisation, continues. The Shock therapy used by Prime Minister Narendra Modi on November 8 turns out to be a brainchild of the Central government. For, RBI was advised about the noteban by the Modi government on November 7, 2016, just a day ahead of final demonetisation announcement by PM, reported Indian Express on Tuesday.

The report also cites a seven-page reply submitted by RBI on December 22 to the Parliamentary Panel on finance headed by Veerappa Moily of the Congress.

Reportedly, RBI to the panel said: Government, on 7th November, 2016, advised the Reserve Bank that to mitigate the triple problems of counterfeiting, terrorist financing and black money, the Central Board of the Reserve Bank may consider withdrawal of the legal tender status of the notes in high denominations of Rs 500 and Rs 1,000.  

Read More: Government has virtually taken over RBI’s functions

Read More: Parliamentary panel questions Urjit Patel over demonetization

Earlier, Union Power Minister Piyush Goyal had said in the Rajya Sabha on November 16 that the decision of demonetisation was taken by the RBI board as it is responsible for running nation’s monetary policy.

In a reply to an RTI query filed by Indian Express, it is found that the proposal to print Rs 2000 notes was passed in May 2016 and printing for the same was started from June 2016. However, there was no discussion with RBI on the possibility of demonetisation in previous meetings of May, July or August. Only on November 7 Modi government advised the RBI for the noteban of 86 % of currency.

In its note to panel RBI also cited “urgency” within the government to scrap the old notes out of the system. The government had advised RBI to place this matter before the directors of its Central Board for consideration immediately.

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The very next day RBI’s Central Board met to deliberate “government’s advice” on withdrawing the legal tender status of the Rs 500 and Rs 1,000 notes. Cutting the long story short, PM Modi announced it on the same evening.

Since November 8 Modi government and RBI has denied several RTI’s regarding currency ban, citing it as a matter of high secrecy for national concern. But it is time the secrecy surmounting the decision of demonetisation decision is made public.

RBI governor Urjit Patel is set to meet Parliamentary Panel (PAC) next week and reply why and how the decision of note-ban was taken. If the PAC is dissatisfied of the governor’s reply it can also summon PM Narendra Modi for the same.

Earlier, former prime minister Manmohan Singh had asked in the parliamentary meet if the Reserve Bank of India was given enough time to think over the demonetisation proposal. The very next day RBI had said that the decision was take in the RBI Board’s meet before the PM’s TV address to the nation.

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Wefornews Bureau

 

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