RBI Governor in line of fire

: From political leaders coming to his defence in a roundabout way to bank staff demanding his resignation, Reserve Bank of India Governor Urjit Patel and his role in the ongoing demonetisation came up for discussion at a public meeting here on Friday.

While hitting out at Prime Minister Narendra Modi for the decision to withdraw Rs.500 and Rs.1,000 notes from circulation, former Union Minister and Congress leader Mani Shankar Aiyar said the RBI Governor would not have agreed to such a move.

“Had Mr. Modi asked him [Mr. Patel] anything, then I think that any RBI Governor who is sitting in place of I.G. Patel [former RBI Governor] today, would not have said ‘you go ahead’, but put in his papers,” said Mr. Aiyar, adding that Mr. I.G. Patel had resigned following some disagreement with then Prime Minister Morarji Desai.

Effective enough?

At the meeting organised by the Centre for Financial Accountability and Public Finance Public Accountability Collective, speakers questioned whether demonetisation would be effective in curbing black money— the stated goal of the exercise.

Thomas Franco, a senior vice-president of the All-India Bank Officers Confederation, said that while his organisation had initially supported the move, the way it was being implemented had left much to be desired.

“There is no proper planning. We still haven’t seen the Rs.500 note in the South, where I am from. About 29 per cent of currency is in Rs.100 notes, but till date we have not got Rs.100 notes,” said Mr. Franco.

He went on to ask: “Should we not demand the resignation of the RBI Governor? The RBI should have prepared.” He added that 11 bankers had died since the demonetisation move came into force.

Tackling black money

Other speakers questioned whether the difficulties faced by the public would end up curbing black money since estimates put the amount of black money held in cash at 6 per cent of the total.

“Mr. Modi promised to bring back black money from Swiss banks, but instead, he is invalidating the small savings of grandmothers...Can the government fight against black money while supporting wilful defaulters,” asked D. Raja, Communist Party of India Rajya Sabha MP.

Professor Emeritus at Jawaharlal Nehru University, Prabhat Patnaik, said the demonetisation move would have a “trivial impact” on black money. “It represents an extraordinary abdication of reason...Black money is not held in stocks, it refers to undeclared activities. As long as these activities are profitable, they will be funded with the new notes,” said Prof. Patnaik.