In a sensational disclosure, an RTI reply has revealed that the Reserve Bank of India had strongly disagreed with Prime Minister Narendra Modi’s demonetisation announcement on 8 November 2016. However, without caring to pay heed to the federal bank’s objections, Modi did not care to wait for the RBI Board’s mandatory approval and announced the wiping off 86 percent of currency in circulation with a notice of just a few hours.
The RBI, in its objections, had also disagreed with Modi’s argument that the note ban will help tackle the menace of black money. Using the new revelation, Congress spokesperson Jairam Ramesh on Monday released the minutes of the 561st meeting of the Central Board of Directors of the RBI, which was held at 5.30 pm on November 8, 2016. Modi had announced the note ban in a televised address at 8 pm the same evening.
He had said that old Rs 500 and Rs 1,000 currency would cease to be legal tenders from midnight. The announcement had caused unending discomfort to millions, leaving nearly 200 people dead due to demonetisation related distress. Modi had faced condemnation for poking fun at citizens’ misery while addressing a diaspora audience in Japan, just days after his controversial announcement.
Ramesh, according to news agency PTI, said that the minutes of the RBI meeting were obtained through a Right to Information (RTI) application filed by an activist, who got the reply 26 months after he had sought it.
“Most of the black money is not held in the form of cash, but in the form of real sector assets such as gold or real estate and that this move would not have a material impact on those assets,” Ramesh quoted the RBI board of directors’ observation.
The RBI was then headed by Urjit Patel, who later resigned without completing his term, reportedly in protest against the central government’s attempts to attack the bank’s autonomy.
Ramesh said that the RBI board had also observed that the ‘growth rate of economy is the real rate while the growth in currency in circulation is normal. Adjusted for inflation, the difference may not be so stark.’
The RBI board, according to the RTI reply, had said, “While any incidence of counterfeiting is a concern, Rs 400 crore as a percentage of the total quantum of currency in circulation in the country is not very significant.”
The RBI under Patel had later sent its approval to Modi’s demonetisation plan five weeks after he originally made the announcement on 16 December.