Reserve Bank of India Governor Raghuram Rajan on Thursday said the decision to withdraw pre-2005 currency notes is neither related to the upcoming General Election nor is an attempt to demonetise the Indian rupee.
“Notes printed before 2005 would continue to be legal tender,” he stressed at the 8th RN Kao Memorial Lecture. The RBI had on Wednesday ordered withdrawal of currency notes printed before 2005 by April 1 this year.
“This is not an attempt to demonetise. It is an attempt to replace less effective notes with more effective notes. I understand people are making a different interpretations. Unfortunately that should not be the interpretation,” he said in response to a question by CBI director Ranjit Sinha.
Rajan assured that this has been done as security features are better on notes printed after 2005 and is based on a request from the finance ministry.
“I have to say that it (withdrawal of notes) has nothing to do with elections which certainly is not the objective,” he said. The CBI director had asked Rajan about the significance of the exercise, which was being undertaken right before the General Elections.
Meanwhile, the RBI governor also called to improve the system of project clearances while keeping in mind environmental considerations. “We need to find a better way. It doesn’t mean that we stop growth but we can’t take five years,” he said.
He also referred to a combination of factors like democratic forces, NGOs and CAG that had stepped in when development was going in one direction. “The fact is that we need to respect environmental rules. But that does not mean we delay projects. Lets make regulations better,” he said.