Former RBI Governor Raghuram Rajan has gone on record to announce that he was never in favour of demonetisation and had warned the central government its catastrophic impact on the economy. Now, he’s revealed that he himself had to come back to India to exchange scrapped currency as he had no clue about the demonetisation date, though the process started during his governorship.
Rajan, who ended his three-year term as RBI Governor on September 4 last year, said he had taken some Indian currency with him to the US.
He added that he was not in favour of demonetisation as according to him the short-term cost of note ban would outweigh the long-term gains.
The former RBI Governor, currently professor of finance at the University of Chicago, was speaking at an event to launch his book ‘I Do What I Do’.
Rajan said he was asked about his views on demonetisation by the government in February 2016 and he “gave it orally,” reported news agency PTI.
“There was absolutely no date fixed for demonetisation,” Rajan said when asked if he too was taken by surprise on November 8, 2016 that Rs 500/1000 notes have been scrapped.
He said he had taken along Indian currency to the US and had to come back to India to “actually change that back” into valid currency notes.
Asked if he would be willing to return to India for another position or was happy teaching in the US, Rajan said he is not special among the diaspora and there were many people who, if called upon, would come back and do what is necessary.
“Many of us have certainly fairly comfortable lives there…coming back to India and doing what I did, gave a tremendous sense of fulfilment…I think it’s very selfish thing to come back. Ya, if called upon…and if there is a place where you can make a big difference, of course,” he said.
In the latest GDP figures, it was revealed that India’s growth had considerably slowed down to 5.74%, the lowest in three years. It followed the RBI’s admission that 99% of demonetised notes had returned to banks, thereby puncturing Prime Minister Narendra Modi’s claims on black money.
Modi on 8 November had claimed that one of the objectives to roll out the note ban was to eradicate black money and counterfeit currency floating in the market. However, the RBI’s confession showed that all money in circulation had returned to bank proving that there was no black money as claimed by Modi.
The digital transactions too have returned to pre-demonetisation period proving another claim of Modi wrong.