THERE WAS never any shortage of currency in the aftermath of the decision to demonetise high-value currency, Finance Minister Arun Jaitley told the Rajya Sabha on Tuesday while answering a clutch of questions on the issue.
“At no point of time, not for a single day, was the currency inadequate. As far as the banks are concerned, the RBI was releasing a certain amount of currency through currency chests every day from the 10th of November, when the re-monetisation process had started,” Jaitley said.
Speaking about ATMs, he said they had to be reoriented to accept and release “alternative” notes. “Keeping in view the size of the note, the thickness of the note, the weight of the note, the machines had to be recalibrated for that particular purpose,” he said. “Because of the reason of maintaining secrecy, this could not be done before…and had necessarily to be done only after the 8th of November.”
This is against the demonetisation narrative that had emerged in the last 50 days of 2016, when cash shortage had virtually crippled the country, long ATM queues had become a routine feature in almost all parts of the country, and more than 100 deaths reportedly occurred due to this shortage. Several times during those days even government functionaries had admitted to a currency shortage and sought people’s cooperation until the situation normalises.
On Tuesday, Jaitley was replying to a supplementary question from CPI(M) Rajya Sabha MP C P Narayanan on why the banks were starved of the new notes for such a long time, as Jaitley had earlier told the House that demonetisation came after nine months of preparations by the government and the RBI. The Finance Minister had told the House that although the RBI board passed a formal resolution on demonetisation only on November 8, consultations had taken place at a “very high level” between the government and the central bank on the issue since February 2016.
The RBI board had “independently applied its mind” to send the relevant recommendation to the government, he added.
When Congress member Shantaram Naik asked about retrenchments after Rs 1,000 and Rs 500 were suddenly demonetised, Jaitley said, “Sir, the overall impact is assessed by the government from time to time…. The government has been making an analysis and the government is conscious of the fact that there are, in the medium term and long term, several advantages in terms of expansion of the formal sector of the economy. This will lead to larger digitisation; this will lead to curbing of black money and crime-money transactions; and this will lead to larger revenue coming into the coffers of the government.”