Demonetisation: RBI says it was govt's decision, deepens secrecy surrounding the decision

Whose idea was it anyway? About two months after the government decided to demonetise Rs 500 and Rs 1,000 notes, the people of India are still in the dark over who proposed the idea.

While power minister Piyush Goyal told the Rajya Sabha a while back the idea was that of the RBI, a report in The Indian Express has today said that the central bank in a note said it was in fact the government's idea.

 Demonetisation: RBI says it was govts decision, deepens secrecy surrounding the decision


According to the report, the RBI has said this in reply to the questions raised by the parliamentary panel on finance headed by Veerappa Moily of the Congress.

“Government, on 7th November, 2016, advised the Reserve Bank that to mitigate the triple problems of counterfeiting, terrorist financing and black money, the Central Board of the Reserve Bank may consider withdrawal of the legal tender status of the notes in high denominations of Rs 500 and Rs 1,000,” the IE report quoted from the RBI 's reply.

The decision to demonetise the high value currency notes was announced by Prime Minister Narendra Modi on 8 November, a day after the advise given to the RBI.

The central bank has also said the government presses had cleared the proposal to print Rs 2000 notes in May 2016 and started printing them from June 2016. However, the board of the bank had not discussed the possibility of demonetisation in its meetings held in May, July or August.

This information has been revealed in an RTI query raised by The Indian Express.

The RBI note is significant as RBI governor Urjit Patel is to appear before the parliamentary panel on 18 January.

Earlier, former prime minister Manmohan Singh, a member of the panel, had raised doubts as to whether the central bank was given enough time to think over the demonetisation proposal. He had also suggested that the panel should quiz the government officials before the RBI governor.

The secrecy surrounding the demonetisation decision is getting all the more murkier as the authorities have been holding back information from the public.

It is high time the government and the RBI made all the files and documents related to note ban public. The citizens do have a right to know why and how the decision was taken.

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Updated Date: Jan 10, 2017 11:49:30 IST