RBI Governor faces aggressive questioning from MPs

Reserve Bank of India Governor Urjit Patel on Wednesday told the Parliamentary Standing Committee on Finance that there was still no final figure on just how much currency was deposited into banks during the period of demonetisation, and that counting “is still on”.

Mr. Patel had been asked to appear before the committee which was examining demonetisation and “transformation towards digital economy and banking sector in India”.

Counting machines

In his deposition, that lasted almost three hours, Mr. Patel said the counting of currency notes was still on and that the RBI had deployed 59 counting machines, with a plan to either rent more machines or buy them. He added that tenders for the purchase of additional currency counting machines were being floated, but that the final count of currency was not complete and therefore he could not share any “firm figure”.

Members of the committee who attended the meeting said that an opposition party MP from the Upper House then sarcastically enquired whether “a final count could be available by May 2019,” to which the RBI Governor did not respond. “Balance sheets are ready by June 30 and it is quite difficult to believe that there is no assessment of how much currency came back, therefore one MP asked whether the figure would available by May 2019 [when the next General Elections are due] at least,” said a member who attended the meeting.

According to sources, Mr. Patel faced aggressive questioning from the members of the committee, with Samajwadi Party MP Naresh Agarwal threatening a walkout over what he termed unsatisfactory answers. Former Prime Minister Manmohan Singh did not ask any questions or intervene as he had done in the previous two meetings.

Mr. Patel gave details of the RBI’s monetary policy and the progress of the digitisation project. He said that whatever currency shortage was there at “beginning of the year” had eased. He also said that the RBI’s projection for economic growth in 2017-18 was at 7.3%.

Members of the committee also said that Mr. Patel chose not to comment on Finance Secretary Hasmukh Adhia’s deposition to the committee, that Mr. Patel had been in the loop over the decision to demonetise currency notes of ₹500 and ₹1,000.

Four objectives

A Congress MP pointed out to Mr. Patel that of the four objectives or outcomes spoken about in the context of demonetisation, none had fructified. “Incidents of terror have gone up, after stone pelting there is bullet pelting now, since you haven’t been able to count the notes you don’t know how much fake currency has been deposited, and as for digitisation, call drops are too common,” he is reported to have told Mr. Patel at the meeting.