During a meeting of the Parliamentary Committee on Finance on Thursday, former Prime Minister Manmohan Singh sought to know whether the RBI was given sufficient time to hold deliberations on the government’s demonetisation move. He also suggested that the panel — which is looking into the demonetisation decision — call government officials to depose before it hears RBI Governor Urjit Patel.
The issue was being discussed in presence of independent experts, including economists Rajiv Kumar and Mahesh Vyas, former chief statistician Pronab Sen and Kavita Rao of National Institute of Public Finance and Policy, who had been called to offer their views to the panel. Three of the experts were critical of the demonetisation decision, sources said.
“We were discussing when the RBI governor should appear before the panel. Singh said that according to a note from the RBI, the government took the decision on November 7 and the RBI board decided on it on November 8. So it would be better if the panel hears from the government first and then calls the RBI governor. Singh said that the panel can then ask the RBI governor regarding autonomy of the institution,” a panel member, who attended the meeting, told The Indian Express.
Accordingly, RBI governor Patel will brief the panel on January 18 or 19 on demonetisation and its implications, while government officials, mostly from the finance ministry, will be asked to depose before it on January 11 or 12.
A BJP member of the panel said, “What Singh was apparently suggesting was that the RBI was not adequately involved in decision-making. He said the government took a decision and then asked the RBI to follow it, after which the RBI board approved it.” He added, “The government is saying it took the decision in view of reasons like Naxalism, drugs, terrorism, counterfeit currency. These come under the Home Ministry, not Finance Ministry.”
Another member confirmed to The Indian Express that the former PM flagged the issue of RBI’s autonomy during the meeting.
One of the experts said that if the expenditure on note printing, overtime work by bank staff and productive time of people standing in queue are taken into account, the overall cost would outweigh the benefits of demonetisation.
At this, a source claimed, a BJP member said that by that logic, the Election Commission should count the productive time of people standing in queue in its election cost.
At their next meeting, the panel members are planning to ask questions about the steps taken by the RBI to ease the cash crunch. The panel will also hear bankers and representatives of the Indian Banks’ Association.