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Did RBI have authority to issue Rs 2,000 and Rs 200 currency notes?

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Mumbai, Oct 28: In what could be a bizarre situation, the Reserve Bank Of India (RBI) does not seem to have any official records to prove that it had authorised the issue of new currency notes in denominations of Rs 2,000 and Rs 200, after demonetisation, according to documents available through RTI.

“As per RTI replies provided by the RBI, the country’s central bank has apparently not published any Government Resolution (GR) or a circular till date to issue the new Rs 2,000 and recently, the Rs 200 currency notes,” says Mumbai-based RTI activist M.S. Roy.

A May 19, 2016 document — roughly around six months before demonetisation — shows that the RBI’s Central Board of Directors approved a proposal put forth by its Executive Director on May 18, 2016.

This (proposal) pertained to the new designs, dimensions and denominations of future Indian bank notes, and the Board resolved to forward it to the central government for approval, as per extracts of the minutes of that Board meeting.

Essentially, this was carrying forward an earlier such proposal made on July 08, 1993 to introduce a new family of Indian bank notes of Rs 10, Rs 20, Rs 50, Rs 100 and Rs 500 of reduced sizes.

This old proposal (July 08, 1993) was approved at an RBI Central Board Of Directors meeting on July 15, 1993 as per a memorandum dated August 3, 1993 sent from RBI’s Central Office, Mumbai, to the Chief Officer, Department Of Currency Manager (RBI Mumbai), which was signed by the then Executive Director, A P Aiyer.

As per that proposal (of July 8, 1993), these new Indian currency notes of reduced size were to incorporate several fresh and enhanced security features in order to check counterfeiting, according to the same August 3, 1993 memorandum (quoted above).

Roy had also filed a separate RTI query on February 27, 2017, asking for documentation about photographs of Mahatma Gandhi which are not being printed on the Re 1 notes, but were being printed on all currency notes of denominations ranging from Rs 5 to Rs 2,000.

In reply to this particular query, the RBI provided resolutions of its board meetings held on July 15, 1993, July 13, 1994 and May 19, 2016.

However, these resolutions talk about design features merely for Rs 10, Rs 20, Rs 50, Rs 100 and Rs 500, all of which bear the photographs of the Father of the Nation.

None of these RBI board resolutions make any references about design features or Mahatma Gandhi photographs for denominations of Rs 1,000, Rs 2,000 and now, the latest entrant to the Indian bank notes family, the Rs 200 currency note.

Hence, Roy said that if the RBI board resolutions never even discussed design features or Mahatma Gandhi photographs to be incorporated in Rs 1,000 notes (discontinued after demonetisation), Rs 2,000 denomination notes (introduced on November 8, 2016) and the subsequent Rs 200 notes (introduced in mid-2017), it clearly indicates that no official approval was granted.

He questioned that if no approval was granted for issuing these denominations, who authorised these denominations, their design, printing and distribution.

“If there has been no approval by the RBI Board, no supporting GR or any other known documentation in the public domain, then there is a big question mark about the legal validity and official (monetary) status of these notes — namely Rs.200 and Rs.2,000. The matter merits an independent investigation,” Roy said.

However, if such approvals do indeed exist, then the RBI and government must explain why these documents were not made available despite an RTI query or why they were not in the public domain.

IANS

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Key Indian equity market indices open in green

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Mumbai, Dec 13: Taking a cue from global markets, the key Indian equity market indices opened higher on Thursday.

The Sensitive Index (Sensex) of the BSE, which had closed at 35,779.07 points on Wednesday, opened higher at 36,024.88 points.

Minutes into trading, it was quoting at 35,979.33 points, up by 200.26 points, or 0.56 per cent.

At the National Stock Exchange (NSE), the broader 51-scrip Nifty, which had closed at 10,737.60 points on Wednesday, was quoting at 10,807.40 points, up by 69.80 points or 0.65 per cent.

Buying at lower levels and hopes of an easing monitory policy with the appointment of Shaktikanta Das as the new Reserve Bank of India (RBI) Governor, pushed the key equity indices up.

The Sensex was up by 629.06 points or 1.79 per cent at the Wednesday’s closing. In the day’s trade, the barometer 30-scrip sensitive index had touched a high of 35,826.58 points and a low of 35,167.47 points. The Nifty, too, was up by 188.45 points or 1.79 per cent.

On Thursday, Asian indices were showing a positive trend. Japan’s Nikkei 225 was quoting in green, up by 1.13 per cent while Hang Seng was up by 1.43 per cent, South Korea’s Kospi was also up by 0.97 per cent. China’s Shanghai Composite index was trading in green, up by 1.50 per cent.

Overnight, Nasdaq closed in green, up by 0.95 per cent while FTSE 100 was also up by 1.08 percent at the closing on Wednesday.

IANS

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RBI is accountable, government runs country: Shaktikanta Das

On the issue of RBI’s reserves, he said a committee to examine it would be constituted shortly and then with the appointment of its Chairman, the terms of reference of the committee would be drawn with fixed timelines.

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Mumbai, Dec 12 : Declaring that he will uphold the “autonomy, integrity and credibility” of the RBI, newly-appointed Governor Shaktikanta Das said on Wednesday that the government is responsible for running the country and the central bank is also accountable.

Briefing reporters here after taking charge as the 25th Governor of the Reserve Bank of India (RBI), Das said that consultations with stakeholders have become fundamental to the central bank’s functioning in view of the complexity of modern day decision-making, and as part of this process he would meet the heads of the Mumbai-based state-run banks on Thursday.

Meetings with public sector banks outside Mumbai would follow “after some days”, he added.

“The RBI is a great institution and I will try my best to uphold its autonomy, identity and values. The autonomy, integrity and credibility is very important for this great institution and it will remain intact,” he assured.

In response to queries on the recent government-RBI tiff culminating in the resignation of Urjit Patel as Governor, Das refused to go into contentious issues.

“I do not like to go into whatever the issues or what are the issues between government which runs the country and the RBI, but every institution has to have its professional integrity, maintain its professional autonomy. At the same time, every institution also must adhere to the principles of accountability,” he said.

“Government is not just a stakeholder but I mean the government of the day runs the economy, runs the country and manages major policy decisions.

“There has to be a free, fair, objective and very frank discussion between the government and the RBI. And, I believe that all issues, however contentious, can be resolved through discussions,” he added.

Das, who holds post graduation degree in history from the Delhi University, unlike his predecessors Urjit Patel and Raghuram Rajan, who were economists of repute, said the RBI board meeting would be held on Friday (December 14) as scheduled.

“We will hold the central board meeting as planned on December 14 and go through the agenda and discuss the various issues that are listed,” he said.

Das took charge as the RBI Governor a day after Urjit Patel resigned amidst a tiff with the Central government on the issue of RBI’s autonomy. Das had steered the monetary situation post-demonetisation as the Economic Affairs Secretary.

On the issue of RBI’s reserves, he said a committee to examine it would be constituted shortly and then with the appointment of its Chairman, the terms of reference of the committee would be drawn with fixed timelines.

Das said he does not want to discuss individual issues as he intends to settle down first and study the issues before taking any decision. On capital requirement in the economy, he said he is open to discussing all issues within the ambit of RBI.

“After the amendment of the RBI Act, the inflation targeting continues to be very important and it’s very heartening to note that inflation broadly is as per the targets and inflation outlook also looks fairly benign at this stage, but we have to be very watchful of the developments,” he said.

Health of public sector banks, liquidity issue and maintenance of growth trajectory of Indian economy are some of the important issues for which he would interact with stakeholders and get an internal feedback before taking a view on these, he said.

Unlike his immediate predecessor Patel, who the government officials alleged had little stakeholder consultations, Das said consultation with all stakeholders always adds value to understanding and his top priority is the banking sector.

“To begin with, I have convened a meeting with the MDs and CEOs of the public sector banks based in Mumbai tomorrow. Banking is an important segment of our economy and is currently facing several challenges which are of critical importance and they need to be dealt with.”

He will follow it up with similar consultations with the state-run banks from outside Mumbai and still later with the chiefs of private sector banks to understand the issues relating to them.

“This is a general consultation. There is no fixed agenda,” he said denying that RBI’s Prompt Corrective Action (PCA) framework, a measure to check banks’ financial health, would be discussed. Currently, 11 out of 21 public sector banks are barred from lending.

Looking forward to working with the officers and staff of the RBI, Das said he always found RBI officers possessing inherent core competence and professionalism to deal with any technical issue.

“I will work as a team with other officials here (RBI) in the best interest of the economy,” he said. Das is a retired 1980-batch IAS officer from Tamil Nadu cadre.

Immediately prior to his current assignment, Das was acting as 15th Finance Commission member and G-20 Sherpa of India. In last 38 years, Das held important positions in Central and state governments in areas of finance, taxation, industries and infrastructure.

IANS

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November retail inflation falls to 2.3%, October IIP up over 8%

Similarly, the output of consumer non-durables rose during October by 7.9 per cent, and that of consumer durables by 17.6 per cent.

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New Delhi, Dec 12 : Lower food prices eased India’s November retail inflation rate to 2.33 per cent from 3.38 per cent in the previous month, while higher manufacturing boosted industrial output growth in October to 8.1 per cent, an official data showed on Wednesday, even as India Inc. welcomed the double bonanza for the economy.

On a year-on-year (YoY) basis, the Consumer Price Index (CPI), or retail inflation, fall was even sharper as compared to 4.88 per cent registered in November 2017.

Central Statistics Office (CSO) showed that the Consumer Food Price Index (CFPI) deflated further to (-) 2.61 per cent in November from (-) 0.86 per cent in October 2018.

Product-wise, prices of milk-based products, meat and fish rose during the month under review on a YoY basis.

In contrast, deflation in the cost of eggs, vegetables, pulses and sugar helped lower the overall food price index.

On a sub-category basis, vegetable prices reduced on YoY basis in November by (-) 15.59 per cent.

“Pulses and products” became cheaper by (-) 9.22 per cent and that of “sugar and confectionery” by (-) 9.02 per cent.

Food and beverages during the month under consideration recorded a fall of (-) 1.69 per cent over the same period last year.

Among non-food categories, the “fuel and light” segment’s inflation rate accelerated to 7.39 per cent in November.

Higher production in the manufacturing sector, especially of capital goods and consumer durables, accelerated India’s industrial output growth to 8.1 per cent in October from a rise of 4.46 per cent in September and 1.8 per cent during the corresponding period of the previous fiscal.

“The cumulative growth for the period April-October 2018 over the corresponding period of the previous year stands at 5.6 per cent,” the ‘Quick Estimates’ of IIP released by the Ministry of Statistics and Programme Implementation showed.

On a YoY (year-on-year) basis, the manufacturing sector’s output expanded at 7.9 per cent, while mining production edged-up by 7 per cent and the sub-index of electricity generation increased by 10.8 per cent.

The output of primary goods, which has the highest weightage of 34.04, grew by 6 per cent. The output of intermediate goods, which has the second highest weightage, inched up by 1.8 per cent.

Similarly, the output of consumer non-durables rose during October by 7.9 per cent, and that of consumer durables by 17.6 per cent.

Infrastructure or construction goods’ output increased by 8.7 per cent and capital goods by 16.8 per cent.

Commenting on the numbers, Confederation of Indian Industry (CII) Director General Chandrajit Banerjee said in a statement: “The impressive rise of industrial output, which has bounced back sharply to record a growth of 8.1 per cent in October is noteworthy and augers well for the narrative of economic strengthening, going forward. The uptick in manufacturing growth also shows the second half has started off on a positive note.”

“High double digit growth in capital goods at 16.8 per cent in October 2018 is an indication of strengthening investment demand in the economy. Demand in the economy, especially in rural India, is reviving as consumer durables grew at the rate of 17.6 per cent in the month of October 2018.

“Going ahead, decline in international crude oil prices and stability in rupee scenario is expected to further strengthen the macro-economic environment in the economy,” said PHD Chamber President Rajeev Talwar.

IANS

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