New Delhi: Reserve Bank of India Governor Urjit Patel is learnt to have told the parliamentary panel on demonetisation that discussions between the central bank and the government on the process began early last year.
Parliamentarians cornered Patel on demonetisation at an in-camera standing committee meeting, but he held his gun that the bank”s autonomy has not been compromised.
He came out with flying colours but he has to un-dergo yet another grilling by the parliamentarians on Friday when he appears before Parliament”s Public Accounts Committee (PAC) headed by Congress member K V Thomas.
No bank can pull the shutters at the end of the day until accounts are reconciled to the last paisa. However, even after 19 days of the closure of receipt of the scrapped notes, Patel refused to state how much old currency came back to the banks.
He rather went by a surprise advice from former Prime Minister Manmohan Singh who interrupted a query by a colleague Congress MP and said: “Don”t answer questions which may create problem for RBI.” Dr Singh has been himself once the RBI governor. He interrupted a question whether there will be chaos if restrictions on cash withdrawal were withdrawn forthwith.
Many Congress MPs were upset over Dr Manmohan Singh”s role as a party MP and that too on a day when the party was holding demonstrations before the RBI offices to demand immediate removal of all such restrictions. Patel did not specify when the restrictions on the withdrawals will be lifted, saying “sooner than later.”
The RBI had issued a directive to all banks to intimate it the exact amount of the scrapped notes collected immediately after close of business on December 30 and yet Dr Patel preferred not to give out the figure of the total old currency collected. It may not create any problem to the RBI as warned by Dr Manmohan Singh but it would have certainly embarrassed Prime Minister Modi who boasted to wipe out Rs 3 – 4 lakh crore in black money and fake currency. Modi had scrapped all old Rs 1,000 and Rs 500 notes worth Rs 15.44 lakh crore on the night of November 8.
Dr Patel also preferred silence at the hearing by the Parliamentary Standing Committee on Finance headed by Congress leader M Veerappa Moily rather than respond to the charge that the RBI acted like a minor department of the Government of India by merely following diktats, instead of standing up to the abnormal pressure.
His grilling came on a day when the Congress organised a nationwide campaign to “gherao” the RBI offices to protest against not yet lifting limits on the cash withdrawals and putting people to ransom by becoming a party to the economic anarchy.
The RBI Governor had no hesitation in disclosing that the nearly Rs 9.2 lakh crore have been injected into the system in the form of the new Rs 2,000 and Rs 500 notes. The money so injected back is, however, only 60 per cent of the money demonetised.
Though RBI had admitted some days ago that the proposal of demonetisation had come from the Centre on November 7, Dr Patel came to the rescue of the Prime Minister by telling the committee that the note ban was being planned since January 2016. It tallies with the PM”s claim that the demonetisation as in the works since the past ten months.
While most parliamentarians present at the meeting were not satisfied with his answer at all, the Congress demanded immediate resignation of Urijit Patel for destroying the autonomy of the RBI and becoming a spokesperson of the Narendra Modi Government.
He, however, insisted that the RBI”s autonomy was not at all compromised in deciding and executing the demonetisation. He was quoted as asserting that the Act that gives autonomy to the central bank had not been infringed.”
Patel had no hesitation in admitting that the request for the demonetisation had come legitimately from the Modi government. He was technically right as the government is empowered by the RBI Act to issue directions to the RBI under Section 7(1) while Section 24(2) gives powers to demonetise specified bank notes, though only on the recommendation of the RBI”s central board. The Act says,: “The Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public interest.”
Meanwhile, a memorandum submitted to the RBI at all its offices after the nationwide demonstrations, the Congress said: “RBI”s role as India”s financial regulator stands completely demolished. RBI has, in fact, become a mouthpiece of the Modi Government, acting at its whims and fancies. Need of the hour is to restore RBI”s credibility, autonomy and integrity by unshackling the illegitimate control of Modi Government over every aspect of RBI”s functioning.
Patel must go: Congress
The Congress Party on Wednesday demanded RBI Governor Urjit Patel’s resignation and asked the government to normalise currency withdrawal limits. “The RBI, for the first time since independence, has lost its autonomy and has become a rubber stamp of the government. We want the government to restore the autonomy of the RBI and if it is not done, then the RBI governor must resign,” Congress leader Ghulam Nabi Azad said.
Senior Congress leaders staged ‘RBI gherao’ protests outside its offices in several states as part of the party’s anti-demonetisation stir during which ex-Union Home Minister Sushilkumar Shinde was detained in Ahmedabad and police resorted to lathi charge in Nagpur.