Nearly three weeks after PM Modi’s 50-day deadline for normalisation of services post demonetization, both the finance ministry and officials of the Reserve Bank of India could not provide details on how much of the banned currency came back into the banking system. One of the committee members of the standing committee of finance confirmed to DNA-WION that when asked as to when the details would be available, the RBI officials replied that the calculation is being done and could not give a timeline to the committee.
However, RBI Governor Urjit Patel received support from the most unlikely quarter when he was being grilled by a senior Congress leader. When Digvijaya Singh asked Patel if he feared there might be social or economic consequences of lifting the money withdrawal limit, former PM Manmohan Singh interjected and said that Urjit Patel shouldn’t answer the question. This interjection was not put as part of the record. The RBI on Monday, increased the daily withdrawal limit from ATMs to Rs 10,000 but kept the weekly ceiling at Rs 24,000.
Manmohan Singh had earlier made a speech against demonetisation in the Rajya Sabha calling it a “monumental failure and organised loot”. The former Prime Minister Singh has also served as the RBI Governor from 1982–85.
The Standing Committee of Finance headed by Veerappa Moily grilled finance ministry officials and the Governor of the Reserve Bank of India, Urjit Patel for nearly two hours on Wednesday. The meeting lasted for four hours, but Urjit Patel joined it in the second half.
The Standing Committee was informed that the RBI has issued Rs 9.2 lakh crores in the new currency to ensure liquidity in the economy post demonetization.
When one of the members questioned the Governor on the emphasis been given by the Prime Minister and Finance Minister on promoting a cashless economy, Patel replied, “The demand will be met with the supply and this is the prerogative of the Reserve Bank of India.” The government officials informed the committee that demonetization was a well thought out decision and preparations were on from January 2016. The Opposition had been attacking the government on the ground that the decision was badly planned and key people were kept out of the loop.
Sources in the committee said that Patel was questioned on a number of issues pertaining to demonetization. Another member of the committee confirmed to WION-DNA that most of the members grilled RBI Governor on the issue of autonomy of the institution and as to how the relationship has changed under the current regime. It was also confirmed to DNA-WION that Urjit Patel will also be summoned again, either during the Budget Session or just after it. A lot of questions remained pending due to paucity of time, though the government has supplied all the answers to the written queries made by members of the Standing Committee of Finance.
But the problem for the government doesn’t end just yet. Urjit Patel is expected to depose before the Public Accounts Committee on 20 January where Opposition members are expected to ask him questions on how the decision on demonetization took place. The demonetization debate has become extremely political especially as the Assembly Elections dates inch closer.