New Delhi: Reserve Bank of India Governor Urjit Patel on Tuesday admitted that demonetisation in November 2016 did affect the Indian economy, but it had only a “transient impact.” He made this statement before the 31-member Parliamentary Standing Committee on finance headed by Congress MP M Veerappa Moily, which also includes former Prime Minister Manmohan Singh who was himself once the RBI governor.
The committee hearings are in camera and hence the exact details of the RBI governor’s submissions could not be ascertained but sources said he skirted specific questions like the RBI’s autonomy and other contentious issues with intelligent answers. They said he also gave a positive picture of the economy, claiming its fundamentals were “robust” and that the plummeting of oil prices after a four-year high will further boost the economy.
Patel, however, promised the committee that he will reply in writing on some of the controversial issues raked up by the MPs like the government trying to control the RBI by invoking Section 7 of the RBI Act and the impact NPAs are having on the economy. As there were a large number of questions, the Governor was asked to submit written replies in 10-15 days and he agreed.
Sources said Patel denied the banks were not giving loans because of the NPAs, pointing out that the credit growth was 15 per cent and that satisfied him. He also made a presentation on the “optimistic” state of the economy as well on the world economy to the committee and the MPs could not sway him from his contentions on the economy brightening up.
“He stayed clear of controversial questions like government invoking special powers, instead he gave intelligent replies without saying anything,” the sources said. The RBI Governor appeared before the panel days after the RBI’s face-off with the finance ministry over issues ranging from the appropriate size of reserves to be maintained by the central bank to easing of lending norms for small and medium enterprises.